Two states showed year-over-year depreciation: Mississippi (-1.3%) and Louisiana (-1.1%). Nevada home prices were the farthest below their all-time HPI high, still 29.7% lower than the state’s March 2006 peak. Home prices continued to increase in these areas in January 2016, though the rate of increase slowed for Oklahoma,Texas, and two of theTexas metropolitan areas. The slowdown in appreciation was the largest for Midland, Texas, which had a year-over-year increase of 10.7% in January 2015, but only a 4.3% annual gain in January 2016. Midland has the highest concentration of oil employment of all metropolitan areas in the US
WSJ - oil prices fall on surge in US stockpiles
Oil prices slipped Wednesday after weekly US government data showed another big increase in domestic crude stockpiles. The benchmark US crude contract declined 58 cents, or 1.7%, at $33.82 a barrel on the New York Mercantile Exchange. The global Brent contract dropped 1.4% to $36.31 a barrel on the ICE Futures Europe exchange. Both metrics were down fractionally ahead of the report. The US Energy Information Administration said US crude stocks grew by 10.4 million barrels last week, versus the 2.6 million-barrel expansion estimated by analysts in a Wall Street Journal poll. Traders feared a bigger increase, however, after the American Petroleum Institute said late Tuesday that US crude stocks grew by 9.9 million barrels last week. The data, combined with the market move, threatened to undermine a 30% rally in the US crude contract since mid-February that oil bulls had hoped would form a floor in the oil market, which has been in the midst of a two-year swoon. ”The positive momentum seen in the oil market in recent days has been curbed by last night’s API report, which showed the biggest build to crude stocks in 11 months,” oil-tracking firm ClipperData said in a note. As of last week, total US crude inventories stood at 507.6 million barrels, a weekly high. Historical monthly data show inventories last surpassed 500 million barrels in 1930.
Zillow - US housing confidence: future uncertainty weighs, but key demographic groups remain confident
The headline US Housing Confidence Index dipped to 66.9 in January from 67.4 a year ago. Among people 18-34 years old, 65% said homeownership and the American Dream go hand-in-hand, more than any other generation. People-of-color also were more likely than whites to consider homeownership integral to the American Dream. Americans’ overall confidence in the US housing market slipped at the beginning of 2016 from a year ago, according to the January 2016 Zillow Housing Confidence Index, driven lower by diminished expectations of the market’s future. But despite this uncertainty, overall aspirations for homeownership are at their highest level in two years, driven in large part by faith among younger Americans and Americans-of-color in the general value of homeownership. And continued optimism and confidence among these key groups will likely go a long way toward ensuring the stability of the housing market for years to come. The semi-annual Zillow Housing Confidence Index, sponsored by Zillow and calculated by Pulsenomics LLC, is calculated for the US as a whole and 20 large metro markets nationwide. It is based on a national survey of 10,000 American renters and homeowners. The ZHCI is composed of three sub-indexes: one that summarizes homeowner and renter assessments of current market conditions (HMCI); another that measures their expectations regarding future home values and affordability (HEI); and a third that gauges their aspirations and attitudes regarding homeownership (HAI).
The headline US Housing Confidence Index fell in January compared with a year ago, to 66.9 from 67.4. Among the three sub-indices, the current US Housing Market Conditions Index (HMCI) nationwide rose to 69.6, from 67.3 a year ago. The US Housing Expectations Index (HEI) was 67.5 in January, down from 69.9 a year ago. The US Homeownership Aspirations Index (HAI) rose to 63, from 62.5 a year ago. Because the expectations index factors more heavily into the larger headline index, its larger year-over-year decline helped offset smaller annual gains in the other two sub-indices and push the overall confidence index down. The survey data underlying the ZHCI reveal that millennials and people of color are most likely to associate homeownership with the American Dream. Among people 18-34 years old, 65% said homeownership and the American Dream go hand-in-hand, more than any other generation (64% of those aged 65 and older associated homeownership with the American Dream). People-of-color also were more likely than whites to consider homeownership integral to the American Dream. Of Hispanic respondents surveyed, 70% agreed that owning their own home is necessary to live the American Dream, followed by 64% of Asian respondents and 63% of black respondents. Less than 60% of white respondents agreed.
The results come at a time when rising rents and stagnant incomes are making it tough for many Americans to buy homes. Millennials are renting longer than past generations as they put off major life decisions, but Zillow’s survey shows millennials value homeownership more than their parents and similarly to their grandparents. Additionally, millennials in particular have a rosier long-term outlook on the performance of the housing market: Those aged 18-34 said they expected home values to grow by 5% per year, on average, over the next ten years, compared to just 3.7% for all Americans. And while the transition from renter-to-homeowner is particularly difficult today in the face of tight credit, low inventory and fierce competition, both younger renters and Hispanic renters indicated homeownership was a primary goal that they were confident in achieving. More than half (54%) of Hispanic renters, for example, said that owning a home someday is a specific goal they are determined to reach, up from 43% two years ago. Among millennial renters in all 20 markets surveyed, 80% said they are confident or somewhat confident they’ll be able to afford to own a home someday, compared with 65% of renters overall. Continued confidence and optimism among millennials and Americans-of-color, in particular, will be critical in ensuring the stability of the housing market as demographics shift in coming years and these two groups grow both in cultural influence and economic clout. Sales of both existing homes and new homes have been tepid in recent months. If sales volumes are to really break out, it will very likely be on the strength of home purchases made by aging millennials that are set to overtake Gen X as the largest home buying group in America, and by growth in homeownership rates among non-white Americans.
Energy outlook for 2016: Looking for a bottom
Talk of production cuts by global oil producers such as Russia and Saudi Arabia have provided a few jolts to the price of oil this year, but the rallies have been short-lived. The dynamic in the oil market continues to be dismal, with the price of West Texas crude still hovering around $30. "It felt like we jumped off a bottom, but we've felt that before," said Stewart Glickman, an energy equity analyst at S&P Capital IQ. "Thirty dollars is an unreasonable price for oil, but sometimes extreme volatility can outweigh fundamentals." The collapse of the oil market and the plunge in stock and bond prices across the energy sector might be a great opportunity for value investors, but Glickman is still cautious. "As much as stocks have been beaten up, the fundamentals have had it worse," he said. "We're still underweight the energy sector, because there's a lot more pain to come." The reason is a stubborn oversupply of oil in the global market, thanks largely to the "fracking" revolution and the explosive growth of US oil production. In the last five years, it has increased from just over 5 million barrels per day to nearly 9.5 million barrels. With Organization of Petroleum Exporting Country members, such as Saudi Arabia, and big non-OPEC producers, like Russia, refusing to cede market share to US producers, the supply imbalance got worse through 2015.
It may not be as bad as the supply glut in the 1980s that took more than a decade to work through, but the current situation will cause further volatility in the oil price. The oversupply is currently about 1 million barrels per day in production, according to market analysts. The International Energy Agency's forecast of 1 million to 1.2 million barrels in new demand this year may be high, but if it isn't, the excess supply could be worked off fairly quickly. In the short term, however, the oversupply will persist. When oil refiners go offline in early spring for maintenance, crude inventories will build further. In addition, with Iranian oil set to come onto the market now that sanctions have been lifted — as much as 1 million additional barrels over the next 18 months is forecasted — the glut could grow. Between those two factors, we could see a lot more volatility in prices over the next three months," said Harish Sundaresh, a portfolio manager with the Alpha Strategies Group of Loomis Sayles. Sundaresh, however, is confident that oil will be trading above $40 by the end of the year, with the potential to rise further in 2017. A big reason for that is the looming shakeout in the US production industry.
Urban Institute: New Detroit mortgage program breaks vicious appraisal spiral
Is this a game changer?
Detroit’s Mayor Mike Duggan unveiled the Detroit Home Mortgage Initiative, a new program that could be a potential game-changer, according to an article by housing expert Laurie Goodman at the Urban Institute. The new program, designed to address the appraisal gap, holds valuable consumer protection features and already earned widespread support from financial and government institutions. In the city, there is an appraisal "gap" that exists because there are few comparable properties to base the appraisal off of, according to Goodman. Although people are putting money into their homes, the poor appraisal values are preventing buyers from obtaining a mortgage for it. This creates a cycle in which sellers do not see it as profitable to invest in their home, which creates a shortage of homes in good condition, and when they are sold, they do not help the appraisal market. The Home Mortgage Initiative was created to allow home buyers to get another mortgage if the home they are buying does not appraise as well as hoped. Laurie Goodman is the director of the Housing Finance Policy Center at the Urban Institute. The center is dedicated to providing policymakers with data-driven analysis of housing finance policy issues. From Goodman's article:
"While the concept of a soft second mortgage sounds simple, it is not. To succeed, this program requires institutions willing to provide funds for loans with a combined loan-to-value ratio of over 100%. Success also requires a program to educate borrowers on the risks they are taking. If an expensive rehabilitation is involved, the consumer also needs to ensure that the repairs are being done properly. The Detroit Home Mortgage Initiative could have a huge impact on the city’s housing market. By allowing for mortgages with loan-to-value ratios over 100%, it could break the vicious appraisal spiral, which has systematically undervalued rehabbed homes. We’ll be closely watching the program’s implementation and hoping for its success, which could be a major turning point for Detroit."
Chris McLaughlin
Keller Williams
Keller Williams
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