Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.
2016 is turning out to be a banner year for mortgage lending, with the number of new mortgage originations increasing 10.3% in the first quarter over last year, and the dollar amount of first-mortgage originations increasing 12.3% for the same period, according to an Equifax report.
Those strong mortgage lending numbers were reflected in the second-quarter earnings posted last week by Wells Fargo, Chase, U.S. Bancorp and Citigroup, which met or exceeded expectations. This week is likely to be more of the same, with earnings due from Bank of America, Goldman Sachs and Morgan Stanley, along with homebuilders Pulte Group and D.R. Horton.
The Brexit decision continues to have an impact on U.S. housing, with mortgage rates flirting with all-time lows and refis jumping to 18-month highs as a result. As HousingWire reported on Friday, consumers reacted with concern to the initial vote and resulting stock losses, but will likely rebound by the end of the month.
On Sunday, Britain’s International Trade Secretary, Liam Fox, said he was aiming for a Brexit date of Jan. 1, 2019, according to article on Yahoo News, which would "start a two-year clock running on Britain's exit from the bloc, by the end of this year."
Despite the generally good news for mortgage lenders, on Friday the White House Budget Office cut its growth forecast for gross domestic product to only 1.9% this year, instead of the 2.6% it forecasted in February, according to an article in The Wall Street Journal. Next year's growth forecast was adjusted down to 2.5% from 2.6%.
From the Wall Street Journal:
Gross domestic product grew at a seasonally adjusted annual rate of 1.1% in the first quarter, the weakest pace in a year, due largely to a slowdown in business investment.
A new report on the sharing economy found that the popularity of businesses like Airbnb and Uber have skyrocketed over the last year, with 36% of Americans saying they planned to use these businesses this summer, up from 17% last year, according to an article published Saturday in the Los Angeles Times.
From the Los Angeles Times:
“There was already significant growth in use, familiarity and trust in the sharing economy over the last year, showing that these services are not a fad and have great potential for longevity,” said Daniel Durazo, an Allianz spokesman.
This longevity, however, could be short-lived if some in Congress have their way. Last week Sens. Elizabeth Warren, D-Mass, Diane Feinstein, D-Calif., and Brian Schatz, D-Hawaii, asked the Federal Trade Commission to investigate the impact of short-term home rental companies on communities’ housing markets.
From HousingWire's coverage:
“In recent years, we have seen the emergence and rapid growth of companies like Airbnb, HomeAway, VRBO, and Flipkey,” the senators continue.
“On one hand, these firms have sparked innovation, increased competition, and have provided new means by which our constituents can earn extra income,” they add, with a caveat.
“We have also read troubling reports of racial discrimination on some short-term rental platforms,” the Senators say. “Furthermore, we are concerned that communities and consumers may be put at risk through violations of sensible health, safety, and zoning regulations under state and local law.”
Miami real estate is back in the news, with the Miami Herald reporting Saturday on the progress of Argentine prosecutors as they investigate ties between ex-Argentine presidents and $21 million in luxury condos in the Sunshine State.
The article, written by Nicholas Nehamas and Kyra Gurney, unravels the real-estate shell game behind those condo purchases, revealed in the course of reporting on the Panama Papers. It's a fascinating (and unsettling) story, complete with an Argentine official "donating" to a convent by throwing bags filled with $8 million in cash (and an assault rifle) over the convent's fence. Read it here.
One of the biggest events this week will be the Republican National Convention in Cleveland, Ohio. The Republican party platform contains specific recommendations for housing, including winding down Fannie Mae and Freddie Mac and reducing the size of the Federal Housing Administration, but it remains to be seen what actually gets talked about at the convention, much less enacted should the Republicans win the presidency.
One group working the convention, as well as the Democratic convention at the end of the month, is the J. Ronald Terwilliger Foundation for Housing America's Families, whose efforts HousingWire outlines in our July magazine cover story. The Foundation wants to draw national attention to the rental affordability crisis and is hosting a benefit concert on July 19 during the convention to support Make Room, a non-profit initiative.
Frank Keating, former governor of Oklahoma, and Rick Lazio, former U.S. House representative for New York, outlined the scope of the affordable housing problem in a recent HousingWire guest blog:
"Excessive rent burdens are not just a “poor” person’s problem. While these burdens hit the lowest-income families the hardest, growing numbers of moderate-income renter households are suffering as well.
Rising rents are also affecting families in all kinds of communities across the country – rural, urban, and suburban. It’s not just a big-city problem. In Ohio, the site of the GOP convention, nearly one in four renters living outside the state’s largest metropolitan areas—Cleveland, Columbus and Cincinnati—spend more than half their income on rent and utilities."