Monday Morning Cup of Coffee: Housing hangs in the balance
2014: Bust or banner year for housing?
Monday Morning Cup of Coffee takes a look at news crossing HousingWire's weekend desk, with more coverage to come on bigger issues.
Housing is at a crossroads, with some saying the industry has nowhere to go but up and that all the signs are there for a self-sustaining breakout, while others say it’s on life support and not every twitch is a sign the patient is coming out of a coma.
This week may tell us what’s left for the rest of 2014.
Aside from earnings, which start this week for some of the companies involved in the housing industry, there are a number of data releases this week that could help tell the tale of the tape.
On Tuesday morning, Federal Reserve Chair Janet Yellen will speak to the Senate Banking Committee on monetary policy.
Assuming Yellen mentions housing, the next day, Wednesday, we’ll get a chance to see how her perspective tracks with June’s housing market index from the National Association of Home Builders.
The NAHB housing market index for June came in below breakeven 50, at 49, which was the best reading since January. And for the first time since January, the current sales component was back above 50, at 54 for a six-point gain.
The future sales component also moved higher in June, up three points to 59 and also the best reading since January.
The third component – traffic – remained in deep contraction at 36. Weakness in traffic underscores the lack of participation by first-time homebuyers and the importance in the housing market of all-cash buyers.
Analysts expect the overall index for July to be 51, just above breakeven.
On Thursday we’ll also get Housing Starts from the Census Bureau. Housing starts took a big step back in May, falling a monthly 6.5% after an anomalous 12.7% spike in April.
The 1.001 million unit pace was up 9.4% on a year-ago basis and fell short of expected 1.036 million units. Single-family starts dropped 5.9% after a 4.6% rise.
Right now, consensus among analysts is that starts will come in slightly higher for June, at an annualized pace of 1.026 million, but that seems optimistic.
San Francisco is trying to repeal the law of supply and demand, and that should work out as well as most other such attempts. This time it’s nothing so silly and destructive as rent control – no, they have on the ballot for November a tax measure to discourage the flipping of properties by real estate speculators.
It’s an anti-market measure that comes from the 1970s, so you know it’s spectacularly inane. The anti-speculation tax was first introduced by then-Sup. Harvey Milk shortly before his assassination in 1978, and it was revived this year during a series of tenant conventions.
The measure creates a supplemental surcharge on top of the city's existing real estate transfer tax, a progressive rate ranging from a 24% tax on the sale of a property within one year of its purchase to 14% if sold between four and five years later.
Because it's San Francisco, this will likely pass.
This will also likely be a disaster, because it’s exactly the sort of thing you get from politicians and populists who don’t have the remotest clue on how business or human nature works.
How do journalists count? One, two, trend. This is about the 300th article saying “Tiny houses are the next big thing” which means one thing for certain: tiny house are not the next big thing.
Look, it’s time we talked, America. These are adult dollhouses, embraced by troubled people who think the answer to all problems in their lives is simplifying, when what they are doing is improperly using an architectural solution to cramped urban living.
Tiny houses aren't for everyone, in fact, it's the opposite of aspirational housing — the ideology underpinning the movement. Let's hope the movement stays small enough, because one more article about this being the next big thing is one article closer to the "Tiny House Bubble About to Burst" investigative report.
Homebuyers, real estate agents and the house curious have a new tool in the ever-growing, ever-evolving housing information field – Weiss Residential Research, which tracks individual houses in most neighborhoods nationwide and attempts to provide buyers and sellers with useful market guidance, showing where the value of a home has been and where it may go.
What they call “house specific” monitors for consumers can track price trends on 50 million single-family homes across the country, and forecast where they will go over the next year.
Its developer is Allan Weiss, who co-founded and was CEO of the company that pioneered the Case-Shiller price index which is the industry standard, so this is no simple guesswork.
Should buy more rental properties, or pay down the ones you own? The Motley Fool answers.
No banks were reported closed by the FDIC for the week ending July 11.