In this week’s Real Estate News in Brief, when we might see the next rate cut, where home prices are going, and how one tiny fortune cookie lived up to its name…
We begin with economic news from this past week.
Lower mortgage rates did little to encourage home builders in April. The Census Bureau says private sector construction was down almost 2% from the previous month. The National Association of Home Builders blames that on a labor shortage, saying that home builders remain optimistic about the housing market. The builder’s association says there’s also concern about higher costs for materials which could “limit robust growth.” (1)
Federal Housing Finance Agency Director, Mark Calabria, responded to the construction slowdown among home builders saying, local governments need to make it easier to break ground on new projects. He said in a speech at the Innovative Housing Showcase in Washington, D.C. “One of the biggest factors driving prices up and dragging supply down is the accumulation of burdensome government mandates and fees, zoning and land-use restrictions, environmental regulations, building codes, and permitting requirements.”
The U.S. trade deficit narrowed in April, but according to MarketWatch, “It’s not really good news.” It reports that both imports and exports tumbled due to ongoing trade tensions, a slower global economy, and the grounding of the Boeing 737 Max which reduced air transport of shipments.
Those trade tensions, and the economic fallout, are also increasing the likelihood of a rate cut at the upcoming Fed meeting. Fed Chief Jerome Powell had previously downplayed the idea of a rate cut this summer but the Wall Street Journal reports, “Officials face a darker economic outlook, making a rate cut possible — if not at their meeting on June 18th, then possibly in July or later.”
Freddie Mac has some good news for homebuyers and real estate professionals. Long-term interest rates dipped again. The average 30-year fixed-rate mortgage dropped 17 basis points to 3.82%. Freddie Mac says you need to shop around however, because there can be a big difference in rates among individual lenders.
In other news making headlines…
Home Price Growth Predictions
Real estate data firm CoreLogic is predicting a new surge in home price growth. It is forecasting that home prices will rise 4.7% from April of this year to April of next year. Home prices were only up 3.6% during the previous year. (2)
The company’s chief economist, Frank Nothaft, says he based the prediction on the impact of lower mortgage rates and wage growth. Housingwire reports that forecasts by the Mortgage Bankers Association and the National Association of Realtors are less optimistic. The MBA is only forecasting a 4.2% gain while NAR says it’ll be just 2.9%.
Home Flipping at 9-Year High
Home flippers are outpacing home buyers. ATTOM Data Solutions says, flips are down to a three-year low, but when you compare them to overall home sales, they represent a higher volume. The report says that flips accounted for 7.2% of all sales in the first quarter. That’s up from 5.9% during the previous quarter. That’s also higher than the year-ago figure of 6.7%.
Other statistics from the report shows, flippers are working harder for their money. ATTOM says, the average gross profit was $60,000 which is $2,000 less than the previous quarter, and the lowest figure in three years. There’s also been an 11% drop in the number of investors doing the flips.
Flood Insurance for Hurricane Season
The National Flood Insurance Program got another short-term extension, just in time for the start of the hurricane season. The U.S. House reauthorized the program as part of a $19-billion disaster relief package that will help victims of natural disasters like hurricanes and wildfires. President Trump has also signed off on the bill. It extends the flood insurance program through September 30th.
Meanwhile, meteorologists are issuing their hurricane forecasts. Those at Colorado State University are predicting 14 named storms with six hurricanes and two major hurricanes. NOAA is expecting 9 – 15 named storms, with 4 – 8 hurricanes, and 2 – 4 major hurricanes. The Weather Company is calling for 14 named storms, seven hurricanes and three major ones. They are all very similar forecasts and slightly above the 30-year average.
Fortune Cookie Turns into Powerball Win
The humble fortune cookie was thrust into the spotlight as a Powerball jackpot winner. A retired 66-year-old North Carolina store owner says he bought a Powerball ticket with the numbers from this fortune cookie, and ended up with a $344 million prize. The cookie was given to him by his granddaughter after a meal at a Vietnamese restaurant so maybe she had a role in the big win.
After taking the lump sum option, and paying a hefty tax bill, he’ll walk away with $158 million. He says he plans to invest in long-term stocks, take his wife on a trip to Vietnam, and give his brother a $1 million piece of his prize. (3)
Maybe he should join our network to learn more about the beauty of real estate investing. We welcome people at all levels of experience from beginners to experts. It’s free to join.
(1) New Home Construction Down: HousingWire