Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on bigger issues.
This week marks the official start of the holiday season, with all the shopping, eating and celebrating that go along with this time of year. The markets are closed on Thursday and have a shortened schedule on Friday, but we'll still be getting some important economic numbers this week. Existing home sales data will be out today, weekly jobs numbers will post on Tuesday and new homes sales data on Wednesday.
With the Federal Reserve widely expected to raise rates at its Dec. 15-16 meeting, economists and others are weighing in across the board with their predictions of how this will impact the economy.
Howard Lutnick, CEO of Cantor Fitzgerald, said in an interview on CNBC Sunday that the rate hike needs to happen, and will only strengthen the dollar.
"They need to get it off the ground," said Lutnick. "They're no reason for them to be talking about it anymore – what's a quarter of a percent anyway? It'll buy us all coffee," he joked.
"It's not a real rate. Our whole lives, did any of us actually think a quarter of a percent was actually an interest rate?" he added.
Speaking of the Fed, Janet Yellen sent a strongly worded letter to leaders in the House of Representatives last week warning them of the dire consequences of passing the Fed Oversight Reform and Modernization (FORM) Act, which would change the way the Fed is audited and would tie interest rate policy to a mathematical formula.
"The FORM Act would severely impair the Federal Reserve’s ability to carry out its congressional mandate to foster maximum employment and stable prices and would undermine our ability to implement policies that are in the best interest of American businesses and consumers. This legislation would severely damage the U.S. economy were it to become law...
"Conducting monetary policy by strictly adhering to the prescriptions of a simple rule would lead to poor economic outcomes...The bill would severely impair the Federal Reserve’s ability to carry out its congressional mandate and would be a grave mistake, detrimental to the economy and the American people."
Yellen sent the letter last Monday, but the House passed the bill on Thursday along mostly partisan lines. The White House said it would veto the bill if it gets through the Senate.
Could luxury “doomsday homes” be the latest fad in real estate? An underground bunker that can withstand a 20-kiloton nuclear blast just went on the market in Georgia for $17.5 million. According to the Atlanta Business Chronicle, the underground bunker sits under 2,000 square feet of commercial space and has two levels: one has a common living area and one is broken into four apartments. It was built in 1969 but fully renovated in 2012.
From the Atlanta Business Chronicle story:
“Guests can enjoy the large home theater with seating for 15, a commercial grade kitchen, a recreation area, library and TV room,” Harry Norman reported. “The Facility is equipped with a full workshop, a separate business and conference center and fully equipped medical room.”
The National Association of Realtors compared the increase in housing prices over the last 30 years to five other everyday items to give the increase some context.
"In 2014 the median sale price of an existing single-family home was $207,000, according to the National Association of Realtors—that’s almost 2.6 times as much as 30 years ago."
But some other items NAR listed increased more: college tuition climbed five times higher in that time period and a gallon of gas tripled. A McDonald's Big Mac went from $1.60 to $4.62. In contrast, cell phones plummeted, going from an asking price of $3,995 in 1984 to an average of $199 today, depending on your carrier and plan. And shares in a stock that was a household name 30 years ago — Radio Shack — went from $76.63 in 1999 to a mere two cents today.
Of course, in some markets — I'm talking about you San Francisco — the median sales price of $207,000 is nothing but a dream. This 765-square foot shack in the Bay City was listed at $350,000, and there was probably a bidding war. I mean, it has a roof and a front door and everything!
Of course, if money is no object, California has a lot to offer potential homeowners. Consider this house being built in Newport Beach. At 52,000 square feet the Italian Villa will be the biggest house in Orange County, with 10 bedrooms, 19 bathrooms and a garage that fits 28 cars. Realtors are estimating the total value will be between $40 million and $100 million.
No banks were reported closed by the FDIC for the week ending Nov 20.