In this week’s Real Estate News in Brief… the homeownership rate rises, sellers are reporting higher profits, and a new list of best cities for job seekers.
We begin with economic news from this past week.
The dream of homeownership is once again becoming a reality for more Americans. The Census Bureau says the national homeownership rate was 64.4% in the third quarter. That’s a half-percent higher than a year ago, and shows that demand remains strong despite higher home prices. The homeownership rate is still well-off an all-time in 2004, however, when almost 70% of families owned their own homes.
The latest Case-Shiller Home Price Index shows that price gains are slowing down in most markets, and are decreasing in the more expensive ones. The 20-city index only rose a seasonally adjusted 0.1%. That’s the smallest increase in prices we’ve seen for almost two years, but prices are still 5.5% higher than they were a year ago.
The needle didn’t move much for construction spending in August. The Commerce Department reported no change in September at a seasonally adjusted annual rate of $1.33 trillion.
Consumers have been much more liberal with their wallets, though. The government says consumer spending rose 0.4% in September because they were buying more cars and recreational goods. Incomes only rose 0.2% so consumers were spending more than the increase in their paychecks. MarketWatch economists say some of that differential may be due to Hurricane Florence. The rate of inflation remained at the 2% level.
That spending exuberance is also reflected in the Conference Board reading on consumer confidence. It rose to 137.9 last month. That’s getting close to an all time high of 144.7 in the year 2000.
Long-term mortgage rates took a tiny step back this last week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 3 basis points to 4.83%. It also says that the lack of available “for sale” homes is more of an obstacle for homebuyers than higher mortgage rates because it’s causing home prices to “rise well above fundamentals.”
In other news making headlines…
I thought I’d include thoughts on current market conditions from some of our economic “thought leaders.” It’s just a coincidence that they all have very similar last names.
The first is Nobel Prize winner and co-founder of the Case-Shiller Index Robert Shiller. He told CNBC that he doesn’t expect a big downturn in the housing market. He said it might look like a bubble because prices have risen for such a long time, but he says the situation is more placid than it was before the Great Recession. (1)
Second is economist and financial commentator Peter Schiff. He told Fox Business Network that the Federal Reserve needs to raise interest rates, but that continued rate hikes will also cause the stock market to crash. He expects the cost of living to rise “dramatically” and a bear market that “is not going to end quickly.”
Third is economist and financial analyst Gary Shilling who told ThinkAdvisor recently that recession is going to strike very soon. He says that, “Bear markets and recessions are mostly the result of the Fed tightening when the economy is exuberant.” He says they are also the result of financial shocks like a stock market sell-off. (2)
Seller Profits Are Growing
Home sellers are realizing bigger gains because of rising home prices. ATTOM Data Solutions says that homes sold for an average of $61,000 more than the original purchase price. That’s a 32% return on investment, and the highest level of seller price gain since the start of the recession.
At the top of the list for price gains is San Jose, California, which is no surprise. Sellers essentially doubled their money in Silicon Valley. San Francisco comes next with a 77% price gain followed by Seattle at about 70%. Rounding out the top ten, you have Santa Rosa, California; Salem, Oregon; Portland, Oregon; Boston; Los Angeles; Nashville, Tennessee, and Salt Lake City.
Nashville, Tennessee may seem like a surprise. Those sellers are seeing a gain of almost 57%.
Best Cities for Job Seekers
A new study by job-ranking website Glassdoor shows which cities are the best for landing a new job. It ranked cities according to how easy it is to find a job, along with lifestyle affordability, and job satisfaction. At the top of the list was Pittsburgh, Pennsylvania followed by St. Louis, Indianapolis, Cincinnati, and Hartford, Connecticut. (3)
The national unemployment rate is only 3.7% with 7.1 million job openings at the end of August. That makes it a great time to look for a new job as employers compete for a smaller pool of applicants.
Tempers Flare in Tiburon Over Proposed Development
A 110-acre parcel of land with stunning views of the Golden Gate Bridge just came on the market for a stunning $110 million dollars. But it also comes with angry neighbors who’ve already sued the current owner over his proposed development plans.
The property sits along the San Francisco Bay in Marin County at the tip of the Tiburon Peninsula. The family that owns it had wanted to build 43 single-family homes but a local group sued the county to stop the project. Another group has also sued for access to walking trails on the property.
Both suits are still making their way through court, which could also haunt a new owner. One solution could be to ditch the plan for a large development and build just one very large home with, of course, a very large yard.
(1) CNBC Article
(2) NewsMax Article