Existing home sales
Resale home sales for December rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December after jumping 4.0 percent in November, according to the National Association of Realtors who reports sales are 3.6 percent higher than in December 2010. Sales data is still far below what economists consider to be a healthy real estate market, however, this marks the third consecutive month of improving sales reports and a total 1.7 percent increase in sales for the year.
Breaking from their consistently cautious tone, Dr. Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”
Supporting Yun’s statement, in January, interest rates have dropped which directly spurred the volume of mortgage applications not only for refinances but for new home loans. Pending home sales hit their highest level in 19 months and new home sales jumped 10 percent for the year, however, home prices continue to slide, mostly due to distressed sales.
Inventory at the close of December fell 9.2 percent to a 6.2 month supply, as available inventory dropped to its lowest level since March 2005, one of the healthiest signs of a pulse from the market we have seen in some time, although distressed sales are stagnant, indicating that the foreclosure backlog (from slowed and frozen processes due to the robosigning debacle wherein foreclosures were being illegally processed without any human review of files) has yet to clear up, which some say could increase the foreclosure inventories by 25 percent this year.
Home pricing drops
After home prices drop to 2002 levels and we take foreclosure backlogs, it is surprising that Dr. Yun would say, “The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future.”
The national median existing home price for all types of housing was $164,500, down 2.5 percent over the year, as distressed sales accounted for 32 percent of sales in December, up 3.0 percent from the month prior and down 4.0 percent from December 2010. Foreclosures sold for an average discount of 22 percent, up 2.0 percent from the previous year, while short sales sold an average of 13 percent below value, down 3.0 percent over the year.
All-cash sales were up 2.0 percent for the month, accounting for 31 percent of December purchases, mostly comprised of investors who purchased 21 percent of homes in December.
First-time buyers fell to 31 percent of transactions in December from 35 percent in November and 33 percent in December 2010.
Contract failures continue to be a factor with over one in three NAR members having experienced a contract failure for the month, up from 9.0 percent in December 2010, mostly due to declined mortgage applications and failed underwriting as appraised values are coming in below the negotiated price, according to the trade association.
Resale homes rose 10.7 percent in the Northeast, up 3.3 percent for the year. The region now has a median price of $231,300, down 2.7 percent for the year. In the Midwest, resale homes increased 8.3 percent for the month, up 9.5 percent for the year with a median price of $129,100 which fell 7.9 percent over the year. In the South, resales homes rose 2.9 percent for the month and 3.5 percent for the year with a median price of $146,900 which dropped 1.1 percent from December 2010. The Western region saw a 2.6 percent for the month, falling 0.8 percent for the year with the median price dropped 0.3 percent for the year to $205,200.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said more buyers are expected to take advantage of market conditions this year. “The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”
Is the real estate industry endorsing Carson’s nomination to HUD?
(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?
NAR strongly backs Dr. Carson’s nomination
When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”
At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?
The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.
In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…
Job openings hit 14-year high, signaling economic improvement
The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.
Job openings hit a high point
To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.
The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.
Good news, bad news, depending on your profession
That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.
Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.
If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.
If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.
Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.
Gas prices are down, so are gas taxes about to go up?
Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.
Gas taxes and your bottom line
Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.
Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.
Supporters and opponents are polar opposites
Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.
Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.
While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.
The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.
Is a gas tax politically plausible?
Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”
Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”
Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.
Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.
“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”
Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.
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