Local Market Monitor’s National Economic Outlook for September
BY BRAD BECKETT ON SEPTEMBER 25, 2018
Local Market Monitor, a National REIA preferred vendor, recently released their National Economic Outlook for September, 2018 where they share their thoughts on developments taking place in the U.S. economy. This month they warn about consumer borrowing and the banks and politicians that are seemingly incentivized to encourage it.
National Economic Outlook – September 2018
September 20, 2018
By Ingo WinzerI’ve been harping about consumer debt for a while now because I think it will cause the next recession. It won’t trigger it, that will be some unrelated event, but all of a sudden people will realize they can’t spend any more money. Here are some facts. Adjusted for inflation, ordinary consumer debt – that is, not including mortgages – is now $12,000 per man, woman and child in the US, up from $4,000 in 1980. That’s equal to 40 percent of income, mainly in the form of credit cards and student loans. It used to be 20 percent.
The problem I see is that banks – which formerly made their money from businesses but now make it from consumers – have every incentive to encourage people to borrow more and more. And politicians have every incentive to help the banks do it.
With no natural brake on the system, where will it end? When debt is 50 percent of income, 80 percent? Or maybe it will never end and we’ll have a larger portion of the population spending less and less, while an ever-smaller, wealthier one spends more and more. That would be a social and political disaster.
Jobs in August were up 1.7 percent over last year. They were up 2 percent in manufacturing, 2.6 percent in business services – the main driver for the economy right now – 2 percent in healthcare, and 1.6 percent at restaurants. Jobs in the retail sector struggled slightly higher after a disastrous year, while jobs in government were again essentially flat.
Jobs in the construction sector were up 4 percent. This may seem like a big deal, but it’s not. After a decade of empty homes and fewer people who can afford to buy – and despite the new boom in California – the construction industry is still smaller than it was ten years ago.
Don’t miss what else Ingo has to say about the economy this month.
Click Here to see his FREE 6 minute webinar.About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.
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Landlord Charged with Housing Discrimination for “No Teenagers Please”
BY BRAD BECKETT ON SEPTEMBER 21, 2018
The U.S. Department of Housing and Urban Development (HUD) recently announced that it was charging a landlord in New Orleans 
with housing discrimination for publishing an advertisement that discriminated against families with children. The ad included language that stated “No Teenagers Please.” Below is HUD’s complete release, reprinted here as a reminder to landlords about the importance of the Fair Housing Act:
WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) announced today that it is charging a New Orleans landlord with housing discrimination for publishing an advertisement that discriminated against families with children. The ad, which was brought to HUD’s attention by the Greater New Orleans Fair Housing Action Center, included language that stated, “No Teenagers Please.” Read HUD’s charge.
The Fair Housing Act makes it unlawful to deny or limit housing because a family has children under the age of 18 and to make statements that discriminate against families with children. This includes publishing print, broadcast or internet advertisements that indicate a preference or otherwise discriminate against families with children. Housing may exclude children only if it meets the Fair Housing Act’s exemption for housing for older persons.
“Landlords do not have the right to deny a family a place to live just because they have children,” said Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “Today’s enforcement action reaffirms HUD’s commitment to ensuring that housing providers meet their obligation to treat all applicants for housing the same, including families with children.”
“Discrimination against families with children – no matter the age – violates the law and limits the housing opportunities of those families,” said J. Paul Compton, HUD’s General Counsel. “HUD will continue to take action to protect the rights of families.”
The case came to HUD’s attention when the Greater New Orleans Fair Housing Action Center, a HUD Fair Housing Initiatives Program agency, filed a complaint based on fair housing tests it conducted after seeing an ad on Craigslist that prohibited teenagers. When testers contacted the owner to inquire about the unit, the owner said, “I don’t want any children. I don’t want teenaged children.”
HUD’s charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainant for harm caused by the discrimination. The judge may also order injunctive relief and other equitable relief, as well as payment of attorney fees. In addition, the judge may impose fines to vindicate the public interest. If the matter is decided in federal court, the judge may also award punitive damages.
April 2018 marked the 50th anniversary of the Fair Housing Act. In commemoration, HUD, local communities, housing advocates, and fair housing organizations across the country have coordinated a variety of activities to enhance awareness of fair housing rights, highlight HUD’s fair housing enforcement efforts, and end housing discrimination in the nation. For a list of planned activities, log onto www.hud.gov/fairhousingis50.
Persons who believe they have experienced discrimination may file a complaint by contacting HUD’s Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 927-9275 (TTY).
The Corporate Tax Cut Is Paying for Itself
BY BRAD BECKETT ON SEPTEMBER 21, 2018
Steve Moore of the Committee to Unleash Prosperity said “Trump economist Kevin Hassett was right — “Thanks to the booming economy, Trump’s tax cuts are well on the way to paying for themselves. The Laffer Curve is at work!” Below is his latest Wall Street Journal piece debunking the liberal myth that the Tax Cut and Jobs Act is blowing up the deficit. The following commentary. It appeared in the Wall Street Journal on 9/19/18.
The Corporate Tax Cut Is Paying for Itself
Faster-than-expected growth has produced a revenue windfall.Kevin Hassett, chairman of President Trump’s Council of Economic Advisers, caused a brouhaha by claiming last week that the corporate tax cut enacted last year has “about paid for itself.” I told Bloomberg it is a little premature to say that, and critics have asserted that even a Trump economic adviser disagrees with Mr. Hassett. But I’ve looked more closely at the numbers, and it turns out he is almost entirely right.
Compare the August 2018 economic forecast from the Congressional Budget Office with the one from June 2017, before the tax cuts passed, and we discover some very good news. The much higher than expected economic growth in the wake of the Trump tax cut means that U.S. gross domestic product will be higher than expected every year over the next decade.
Even if we assume a reversion to the pre-Trump 1.9% growth path, the ratchet up in GDP this year translates into $179 billion in unexpected output this year, $465 billion next year, $654 billion in 2020, and so on. This magic of compounding yields more than $6 trillion additional GDP over the decade thanks to the faster growth already achieved.
The federal government is expected to capture a bit more than 18% of that extra output in tax revenue—about $1.1 trillion over the 10-year window. That’s well above the $400 billion to $500 billion expected revenue loss from the corporate tax-rate cut.
Corporate tax revenues are down this year, but receipts from nearly every other tax source are rising at the federal and state levels. The higher growth this year alone will give states and cities almost $20 billion in windfall revenue. No surprise then that many states are reporting “unexpected” gains in tax collections this year and will have budget surpluses.
Perversely, because the economy is bigger now than expected, the CBO has revised upward its estimated “cost” of the tax cut. Because of lower tax rates, the government will get a smaller share of the larger-than-projected economy—even though the tax cut encouraged the faster growth.
One can argue about how much of the boom is a result of the corporate tax cut. My view is that the small-business tax cuts also have helped, as have deregulation and pro-energy-production policies.
The results we are seeing are perfectly consistent with the original game plan. We always believed that creating jobs and elevating growth from 2% to 3% or 4% should be the major focus of the economic revitalization strategy. Faster growth would make every other national problem—poverty, stagnant wages, funding Social Security, even drug abuse—easier to solve. Certainly the national debt is less frightening with $6 trillion more GDP.
This is the growth dividend we all hoped for when designing the tax cut. Although it is still early in the game, so far things are going even better than we expected.
Copyright © *2018* *Committee To Unleash Prosperity*, All rights reserved.
Most Expensive ZIP Codes for Rent
BY BRAD BECKETT ON SEPTEMBER 21, 2018
Where are America’s most expensive ZIP codes for rentals? Examining this data can reveal a lot about a town or community. To that end, RentCafe recently compared average apartment rents for all ZIP codes in 130 major U.S. markets using data from the Yardi Matrix. Ok…but, here’s where it gets interesting; their research shows that of the top 50 ZIP codes with the highest rent, 26 of them are in New York City’s Manhattan! Go figure? However, if you go through their findings it does yield some surprises and offers up some good data…..New York being the exception to the rule.
Adjusted for Inflation, Home Prices are 4% Less than in 2007
BY BRAD BECKETT ON SEPTEMBER 21, 2018
This one puts everything into perspective; A recent “chart of the week” from the Mortgage Bankers Association illustrates how home prices, when adjusted for inflation using the CPI, are still nearly 4% below the second quarter of 2007. The chart also shows the quarterly average for the NAR’s months supply of existing homes for sale, which is a measure of inventory that accounts for both the pace of sales and the number of homes for sale on that market.
“…we are now starting to see signs of deceleration in home prices, as data for the second quarter of 2018 shows that home prices increased at a rate of 6.5 percent over the year, compared to a 7.3 percent increase in the first quarter…”
87% of Homebuyers in Detroit Paid Cash
BY BRAD BECKETT ON SEPTEMBER 21, 2018
We all know that when it comes to making purchases, cash is king. However, when it comes to buying homes, more often than not, there is a loan involved. A recent article in the Wall Street Journal (reposted on Realtor.com) says that in the city of Detroit the vast majority of buyers are paying in cash – even with rising home prices. In the first six months of 2018, 87% of all single-family home & condominium buyers paid cash compared with 28% paying cash nationwide. That being said, the median price of a home in the Detroit was just just over $32k. But also:
“People looking to buy those renovated homes—often affluent young professionals or emptynesters—may also face challenges in getting a mortgage because those properties are difficult to appraise. Lenders have trouble determining the value of a newly renovated home in a neighborhood otherwise filled with distressed properties because there are few comparable sales to benchmark against.”
Best Places to Live in America?
BY BRAD BECKETT ON SEPTEMBER 21, 2018
Where are the best places to live in America? That’s surely a loaded question and one that Realtor.com recently put to the test for the 2nd year in a row. They teamed up with Money magazine and looked at over 135k data points at places with populations greater than 50k. They looked at items that included the overall economic health, public schools, local amenities, housing, and the cost of living.
“For someone who’s starting from scratch, this is a list of areas with great quality of life, healthy housing markets where affordability is important, and great overall community,” says Danielle Hale, realtor.com’s chief economist.
The top 10 Best Places are:
- Frisco, TX
- Ashburn, VA
- Carmel, IN
- Ellicott City, MD
- Cary, NC
- Franklin, TN
- Dublin, CA
- Highland Ranch, CO
- Sammamish, WA
- Woodbury, MN
Yardi Says Multifamily Rents Keep Climbing
BY BRAD BECKETT ON SEPTEMBER 21, 2018
According to the latest Yardi Matrix, U.S. multifamily rents rose $2 in August to $1,412 – which they report is yet another all-time high, having now risen 7 months in a row. Year-over-year in July, rents were up 3.1%. Yardi says the sector’s performance is highlighted by rising occupancy rates in the face of robust supply growth.
“The multifamily market, however, shows no signs of nearing the end of its cycle. While it might be overstating the case to say that the sector is picking up steam, August rent data indicates that deceleration no longer seems to be an accurate term for the state of the market.”
Data Shows Migration to Low-Tax Metros is Accelerating
BY BRAD BECKETT ON SEPTEMBER 21, 2018
We have seen this before...Not only do people vote with their wallets but also their feet. Now, a new report from Redfin details how low-tax states are attracting residents from high-tax states. Redfin says the trend of people leaving high-tax states for low-tax ones has been underway since 2010 and is accelerating. Interestingly, they report that taxes are three-times lower in the top-10 migration destinations than in the 10 places people are most commonly leaving. Well, go figure…..
“With home prices reaching new heights in many metro areas, it’s no surprise people are continuing to move away from expensive metros in search of homeownership,” said Taylor Marr, Redfin senior economist. “Last year’s tax reform poured fuel on the fire. By capping mortgage interest and state and local tax deductions, there is an even greater incentive for homebuyers to consider moving to a lower-tax state.”
Chimney Anatomy
With one more week of Summer before us it’s time to start thinking about Fall maintenance. With that being said there is one important element of a house that often gets overlooked and can cause a lot of financial hardship if not properly maintained…your chimney. But what exactly are these things and how do they work? Today’s infographic from brickrestoration.com gives us a brief overview of these smoke-removing marvels….Happy Friday!!!
