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Market Minute - April 11, 2017

Get a roundup of weekly economic and market news that matters to real estate and your business.


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Market Minute - April 11, 2017

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Housing/Real Estate Market

No effect from Tax Reform on home prices-
Corelogic reports a study concluding that the TCJA has not affected home prices. The tax bill implemented tax changes that in aggregate increased household aggregate income (which should lead to more housing consumption) while implementing some changes that increased the cost of owning versus renting, these effects appear to have had no effect over the period studied. Future studies may look at the slowing effect on prices in specific upper-middle price segments ($750k – $1.5M), in high price states where buyers received fewer tax cuts but have incurred higher housing related tax changes.
 


Macro Economy

Job openings and unemployment at all-time highs but positive indicators are flattening.
Bureau of Labor Statistics’ JOLTS reported that the economy had 6.1 million job openings – still record levels but as the last month. The quit rate another indicator of economic strength -  how secure workers feel about getting a new job after quitting, has also been flat for the last 3 months at 2.2% of workers (or 3.2 million total quits). In general, data suggests slack remaining in the labor market as the Fed moves towards more restrictive monetary policy.

Inflation is holding flat: caused by drops in gas prices. 
Department of Labor reports that the Urban Price Index for (CPI-U) decreased 0.1 percent in March on a after rising 0.2 percent in February. The drop was mostly driven by a large decrease in gas prices: the index for all items without food and energy increased 0.2 percent in March.  

Meanwhile, consumers expect no change in inflation and slight downturn in economic prospects.
Surveyed consumers believe that inflation will remain stable. The Survey of Consumer Expectations reports that they believe inflation will be at 2.8 percent in the short term and 2.9 percent in the medium term, the same as reported previously. Business expectations about inflation are also flat: the Federal Reserve Bank of Atlanta reports that businesses are expecting 1.9 percent inflation in one year, unchanged from previous quarter.  Consumers were slightly less optimistic about labor markets: their expectations have worsened about future income growth, the unemployment rate, and the chance of losing one’s job.



Real Estate Finance

Mortgage rates remain at bottom of March/April levels: the 30 year fixed is at 4.5%.
Mortgage News Weekly reports that rates bounced up a bit after a slight fall. Meanwhile the Mortgage Bankers Association Weekly Survey also reported that mortgage applications decreased 1.9 percent from last week, but remain 5% higher than from this same point last year. Refinance shares of total applications are down to their lowest levels since September 2008.


  

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