Jobs: Good. Wages: Not so good. Housing: Moody. Turns out Americans weren’t immune to the summer spectacle in Greece and China, according to Fannie Mae. But the economic recovery continues to chug along. This week we get data on retail sales, a deep dive into loan modifications for underwater borrowers and a report on mortgage debt. Read on.
Greece and China have had a rough summer, and Americans have been feeling their pain. A survey last week showed that more of us soured on the housing market and the economy as things went downhill overseas.
Fannie Mae’s National Housing Survey showed a sharp U-turn in consumer attitudes in July. The share of people who think now is a good time to buy shrank for the third straight month, to 61 percent. That’s a record low in the survey’s five-year history.
We’re more pessimistic about finances and the economy, too. More than half of of those surveyed (54 percent) said the economy was on the wrong track. Only 44 percent expected their personal finances to improve over the next year. Fifteen percent reported “significantly lower income” compared to a year ago, up from 12 percent in June.
Wha…? The economy is getting better, and home sales have been pretty darn good, right? Yes and yes. It looks like all the scary headlines out of China and Greece simply put Americans in a bad mood last month. It doesn’t take much to put folks on edge in this slow-motion recovery.
“It is premature to read too much into this month’s results, as the survey was taken around the time of increased global turmoil, including Greece’s potential default and China’s stock market plunge,” Fannie Chief Economist Doug Duncan said. “Most of our key indicators are as strong or stronger than they were at this time last year, which is indicative of an improving housing market.”
Americans still think home prices will rise 3 percent in the next 12 months and nearly two-thirds would buy a house if they were to move, Fannie’s survey found.
Mortgage interest rates fell for the fourth week, to 3.91 percent, according to Freddie Mac. Loans are incredibly, incredibly cheap, people.
Cheap, but not easy to get. Still, banks say they’ve lightened up on lending standards over the last three months. Jumbo mortgages in particular are getting easier to qualify for, according to the Fed’s July survey of lending officers.
Demand is up, too, with more customers applying for home loans, even subprime. But the “vast majority” of banks still don’t offer mortgages to the riskiest borrowers, the Fed reported last week.
The upshot? The housing market is holding its own, but we’re still braced for a slowdown that might go beyond the usual end-of-summer lull. See last month’s Demand Index for details.
We had another month of decent job gains and anemic wage growth, the Labor Department reported. Young adults are still missing from the labor market.
Another signal of market health: Fannie and Freddie, the two government-backed companies that keep mortgage money flowing, reported decent second-quarter earnings last week. Mortgage quality is improving, too. The companies, which got $187 billion in government bailouts after the collapse, will send another $8.3 billion to taxpayers, bringing their total payback to $239 billion so far.
The housing bubble might have been avoided if the Fed had raised rates by 8 percentage points. But that might have put us all out of work, so….. Fed researchers have a new analysis here (Geek level: high).
This is interesting. Among new-home buyers with a wish list, schools rank dead last, behind “looks” and “safety”, according to the National Association of Homebuilders. Hmmm.
Flippers are making bank, but we’re seeing fewer of them, RealtyTrac reports. The average return was 35.9 percent in the second quarter (about $70,700), up from 23.4 percent a year ago. Not too shabby. But flipping is getting riskier as appreciation slows.
Flip-worthy houses are harder to come by, too. In May, foreclosures and short sales accounted for less than 10 percent of home sales, the smallest share since 2007. At its peak in January 2009, distressed properties made up nearly a third of all home sales. At this pace, distressed sales won’t be “normal” (2 percent) until 2018, CoreLogic says.
Oooh, another really expensive parking lot, this one for yachts.
Redfin Chief Executive Officer Glenn Kelman once said real estate was a “screwed up” industry. Here’s another good quote from him: “To affect the real world, you have to be in the real world.” Which we are. Thanks for the story, Vox.
The “Up” house has a new home, which makes me very happy for some reason.
