El Paso Investors Club

BY BRAD BECKETT ON DECEMBER 26, 2019

A recent story in the Wall Street Journal (reposted on Realtor.com) explored about how some California homeowners recently found out their insurers wouldn’t renew their fire-protection policies. They reported that, in response, California announced a one-year moratorium forbidding insurers from dropping customers who live in or adjacent to ZIP Codes affected by this Fall’s wildfires.  In addition, the California Department of Insurance said that over the past four years, insurers have declined to renew policies for 350k California homeowners who live in areas at high risk for wildfires.  They say  the problem isn’t just limited to California and that homeowners on the East Coast are losing coverage as well.  Homeowners  basically have three options (but each one has drawbacks):  1 – Adding disaster-resistant features could make your home more insurable;  2 – Shopping for comprehensive coverage from a different insurer; and, 3 – A state’s FAIR plan, which stands for Fair Access to Insurance Requirements and is considered the insurer of last resort.  Meanwhile, in California:

There are also fears that insurers will ask the state’s Department of Insurance for across-the-board rate increases—or stop doing business in the state altogether to avoid further losses.  “The problem with that is that carriers are not nonprofits. If you strip away their ability to underwrite, they can’t afford to do business,” says Karl Susman, a Los Angeles-based insurance broker.

Click here to read the full story at Realtor.com.

Click here to read the full story at the Wall Street Journal.

BY BRAD BECKETT ON DECEMBER 26, 2019

According to recent report from Zillow, renters spent a cumulative of $4.5 trillion on rent during the 2010s.  In fact, they point out that in 2019, renters spent more than $512 billion on housing – the most of any year in this decade. Not surprising, metro New York renters spent the most in 2019 and throughout the decade, followed by Los Angeles and San Francisco.

“While the total amount of rent paid has increased each year this decade, that trend is by no means immutable,” said Zillow Group Economist Joshua Clark. “With rental appreciation expected to decrease in the coming year and a homeownership rate that has been ticking up over the past few years, a small or even negative change in total rental spending could be in the cards in the early 2020s.”

Click here to read the full story at Zillow.com.

BY BRAD BECKETT ON DECEMBER 24, 2019

According to EllieMae’s latest Origination Insight Report, interest rates rose for the first time in 2019, increasing to 3.97%, up from 3.94% in October.  In addition, the percentage of adjustable rate mortgages also increased for the first time in 2019, rising from 5.0% in October to 5.3%  in November. The percentage of refinances dropped back below 50%, falling from 51% in October to 49% in November.

“Interest rates rose for the first time in 2019, and as expected we are seeing the percentage of adjustable rate mortgages rise and the percentage of refinances taper off,” said Jonathan Corr, President and CEO of Ellie Mae. “Simultaneously, closing rates have reached the highest point in 2019 at 78.6 percent…”

Click here to read the full release at EllieMae.com.

BY BRAD BECKETT ON DECEMBER 24, 2019

One of the key drivers of a home’s sale price is the quality of the local school system.  Interestingly, recent analysis from the National Association of Realtors illustrates the positive relationship between public school enrollment and rising house prices.  They say that over the last 7 years, counties with increased public school enrollment  experienced higher price appreciation, than those that did not.  The graph below shows the positive relationship between public school enrollment and housing prices.  Indeed…

“Across the country, hallways and classrooms are full of activity. More than three-fourths of the school-aged population, 48.2 million students, were enrolled in a public elementary and secondary school in 2018.”

Click on the graph to make it interactive

Click here to read the full report at the National Association of Realtors.

BY BRAD BECKETT ON DECEMBER 23, 2019

The National Association of Realtors is reporting that existing home sales were down 1.7% in November, however both the Northeast and Midwest regions both reported growth.  The median existing-home price for all housing types was $271,300, up 6.2% from November, 2018 – marking 93 straight months of year-over-year gains.  Total inventory at the end of November was 1.64 million units, down approximately 7.3% from October and down 5.7% from one year ago.  Total unsold inventory was at a 3.7-month supply at the current sales pace. Properties remained on the market for around 38 days in November.

Lawrence Yun, NAR’s chief economist, said the decline in sales for November is not a cause for worry. “Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year,” said Yun.

Click here to read the full release at the National Association of Realtors.

BY BRAD BECKETT ON DECEMBER 23, 2019

Just before slipping (slithering?) out of town for their annual Christmas break, Congress passed (and subsequently signed by the President) the $1.4 trillion Further Consolidated Appropriations Act that will fund the federal government for the rest of FY 2020.  However, sneakily tucked into that measure was something that will cause investors to take notice:  the SECURE Act (Setting Every Community Up for Retirement Enhancement).   The bill had already passed the House back in April, 2019 but had been languishing in the Senate until it was amended into this fast-tracked funding bill. National REIA partner Equity Trust pointed out that “the bill will affect IRA Required Minimum Distributions and inherited IRAs, among other aspects.”

Indeed…Yahoo Finance has pointed out some key provisions:

• Your RMDs Will Start age Age 72, not 70 ½
• You Can Contribute to Your Traditional IRA After Age 70 ½
• You’ll Have to Pay Taxes on Inherited IRAs Sooner (eliminates stretch IRAs)
• You May See a New Annuity Option in Your 401(k)

Click here to read the full story on Yahoo Finance.

BY BRAD BECKETT ON DECEMBER 23, 2019

The U.S. government is reporting that privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,365,000.  This figure is 3.2% above October’s revised estimate of and is 13.6% higher than November.  Single‐family housing starts in November were at a rate of 938k, which is 2.4% higher than October’s revised figure.  November’s rate for units in buildings with five units or more was 404k.  Privately‐owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,482,000.  This figure is 1.4% higher than October’s revised rate and is 11.1% higher than November, 2018.  Single‐family authorizations in November were at a rate of 918k, which is 0.8% higher than October’s revised number. Authorizations of units in buildings with five units or more were at a rate of 524k in November.

Click here to read the full report at the U.S. Census Bureau.

BY BRAD BECKETT ON DECEMBER 4, 2019

National apartment listing site ABODO recently reported that the median nationwide rent price for one-bedroom units in November was $1,078 and $1,343 for two-bedrooms.   ABODO uses over 1 million listings across the United States to calculate the median 1-bedroom rent price by city, state, and nation and then track the month-over-month percentage change. To avoid small sample sizes, they restrict their analysis to cities meeting minimum population and property count thresholds. Be sure to check out their extensive city list.

Click here to read the full report at ABODO.com.