Happy Holidays

The end of the year is in sight as we enjoy the final holidays of 2019. As we have mentioned previously, it has been a very interesting year to say the least. Highlighted by lower interest rates, a strong stock market, a slower growing economy and trade wars. The next question is--how much of these things will be carried into 2020? Predicting the future is very tricky and in the next few weeks we be featuring some of the major forecasts.

For now, we will just present some observations. For one, the trade wars show no sign of ending. A few weeks ago, there seemed to be some good news on the way. At that time, we warned there are likely to be many ups and down on the way. That has proven to be true. Here is the good news -- the trade wars do not seem to be affecting our overall economic growth that severely.

Will the economy continue to grow slowly? Many were predicting a recession in 2020. While growth has slowed, recent good news such as the solid jobs report provides an indication that a recession is not imminent. Even the Federal Reserve indicating they will remain on the sideline means that they are not currently worried. On the other hand, if the economy starts to heat up, that would not be good news with regard to the low interest rates we have experienced this year. Thus, the best news would be to avoid a recession, as the economy continues to grow fairly slowly. Slow and steady as she goes.

  

The Markets. Rates were stable in the past week. For the week ending December 19, Freddie Mac announced that 30-year fixed rates remained at 3.73%. The average for 15-year loans was also stable at 3.19% and the average for five-year ARMs moved up one tick to 3.37%. A year ago, 30-year fixed rates averaged 4.62%, almost 1.0% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac --"The economy continued to pick up momentum with a solid increase in residential construction, improvement in industrial output in our nation’s factories and a rise in job openings. 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. The demand is clearly not being met for entry-level Millennials and trade-up Generation X home buyers. If there was more inventory of unsold homes for buyers to choose from, home sales would be rising at a faster rate."  Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes. 

	Daily Value	Monthly Value
	Dec 19	November
6-month Treasury Security	1.57%	1.59%
1-year Treasury Security	1.52%	1.57%
3-year Treasury Security	1.65%	1.61%
5-year Treasury Security	1.73%	1.64%
10-year Treasury Security	1.92%	1.81%
12-month LIBOR		1.950% (Nov)
12-month MTA		2.146% (Nov)
11th District Cost of Funds		1.100% (Oct)
Prime Rate		4.75% (Oct)

 For the first time since 1850, the average size of the U.S. household is on the rise. It’s not just the kids or Millennials, either. Households are growing and becoming multi-generational. Over the last century-and-a-half, household sizes have actually been shrinking, according to the data from the Census Bureau. But that trend reversed recently. In 2010, the average number of habitants in a house was 2.58, but in 2018, it was 2.63. According to the Census Bureau, the population within a household has grown 6% since 2010 and household formation has grown 4%. About 20% of households today are a multi-generation home, up from 12% of households in 1980. During the previous economic downturn, many households most likely added or retained an extra adult, RealPage said. These extra adults are often a parent or child of the primary occupant or a roommate or boarder who cuts down on the cost of living. This makes up 20% of households in 2019, up from 17% in 2007. Despite these numbers, single-occupant apartment households still outnumber multi-occupant units. Of those multi-occupant apartment households, roommates by necessity, young couples/roommates by choice, families, and established married couples are the four commonalities. Source: RealPage

Data released by the Census Bureau’s Housing Vacancies and Homeownership Survey found the minority homeownership rate rose 0.9% to 48.3% during Q3 2019. This year-over-year increase is higher than the overall U.S. homeownership rate, which rose 0.4 percentage points to 64.8% during the quarter. The Hispanic homeownership rate saw the highest increase, rising 1.6 percentage points to 47.9% during the quarter. Homeownership for African-Americans gained 0.8 percentage points for a rate of 43.3%—the largest gain in African-American homeownership since Q3 2017. Five of the prior six quarters saw declines in African-American homeownership. The Census Bureau states that minorities listed as “Other households” (Asian, Pacific-Islander, Native American, and other races) saw its homeownership rate drop to 58.9%. Source: DSNews

Membership in the National Association of Realtors, the largest housing industry trade group, reached a record high of 1.41 million this Fall. That’s 2.2% higher than the 1.37 million members recorded in October 2006, the pre-bust peak, according to the trade group’s data. In the wake of the financial crisis, sparked by a 2008 surge of foreclosures, the group’s membership bottomed at 963,455 in March 2012 before starting to trend upward again. Real estate agents and brokers who belong to the trade group are the only housing professionals who can use the term Realtor, which is trademarked by NAR. They pledge to adhere to the group’s Code of Ethics and Standards of Practice, an eight-page document members refer to, simply, as “the code.” Like other trade organizations, NAR lobbies state and federal governments on issues important to its members. NAR has spent $30.1 million lobbying so far this year, according to Open Secrets, a Washington non-partisan group that tracks spending on elections and public policy. Source: HousingWire