U.S. cities and states are decreasing their spending on everything from highways and police stations, to sewage systems, which could have widespread effects on the economies of communities, The Wall Street Journal reports.
WSJ reports that state and local governments spent in August $248.47 billion on construction, the lowest amount since March 2014. States are curtailing investments in infrastructure and higher education in trying to spring economic growth forward, says Gabe Petek, managing director for state ratings at S&P Global Ratings.
“We’re seeing anemic [government] revenue growth and consistent austerity-oriented budgets,” says Petek.
For example, in Kansas, city officials delayed 24 road-construction projects this spring in trying to help balance the state’s budget.
Many states continue to struggle to fully recover from the Great Recession and the large declines in tax revenues that occurred from it. Pew Charitable Trusts reports that in late 2015, inflation-adjusted tax revenue was lower in 21 states compared with the peak before or during the recession.
State tax revenues continue to fall too, dropping 2.1 percent in the second quarter compared to a year earlier, according to the Rockefeller Institute of Government. Such revenue decreases are curtailing state and local municipalities’ ability to borrow money for capital projects.
The University of Connecticut has felt the affects. It had to delay a $150 million renovation of its Gant Science Complex by several months as well as a $10 million remodel of the roof at Gampel Pavilion.
“We’re trying to balance priorities,” says Scott Jordan, the university’s chief financial officer. The cuts are “forcing us to take a look at what things support our core mission and Connecticut’s economy.”
Nevertheless, analysts expect things to look up soon for municipalities. Construction of public buildings—such as courthouses, fire stations and other government facilities—are forecasted to increase in 2017, according to predictions from Dodge Data & Analytics in its recent annual outlook.
“This is expected to be the bottom of the cycle for public buildings, as government fiscal conditions have slowly mended,” the report notes.
The U.S. home ownership rate rebounded slightly in the third quarter, after having plummeted to a 50-year low in the previous quarter. The Census Bureau reported this week that the home ownership rate rose to 63.5 percent last quarter.
Household formation is increasing, despite the rate still being lower than a year ago and far off from its 69.2 percent peak during the housing boom. In the third quarter, more than 1.1 million households were added.
Household formation is the number of newly occupied housing units, which includes both rented and owned. Most of the recent uptick in household formation has been attributed to the renter side. Just under half of the new households formed in the third quarter were from home owners.
“Though the majority of household formation is still renters, the owner-occupied share was at its highest level in a decade,” says Jed Kolko, chief economist at Indeed, an online job site. “Both the improving economy and the aging of millennials will give home ownership a boost.”
As millennials age into their 30s, they’re starting to form new households. They often opt to first rent before settling down and purchasing a home, say housing analysts. A survey conducted by Trulia this year shows 80 percent of millennials say they want to own a home, which is the highest share of any other generation.
Facebook: is it friend or foe when it comes to building your business? On the face of it, a social media site like Facebook would seem to be a no-brainer for reaching out to people when they’re ready to buy or sell a house. But often the reality doesn’t live up to the potential. You either spend too much time on the platform for little return or you turn off people by marketing too directly to them.
A top producer in the Atlanta area, Maura Neill, thinks she’s found the right balance. The RE/MAX Around Atlanta agent uses Facebook in a variety of ways, but one way she uses it to good effect is to build attendance at events she hosts twice a year. And it’s these events—off-line, in-person, on the ground—that build her business in the end.
In fact, she says, she gets anywhere from half a dozen to a dozen referrals out of these events, and that is part of the concrete ROI she sees from her social media effort.
Neill talks in-depth about how she uses Facebook in The Takeaway with Nobu Hata, a new audio podcast series. Neill’s remarks are featured in the latest Voice for Real Estate news video from NAR.
Also looked at in the video is the big win by the real estate industry against what many saw as overreach by the federal government on anti-kickback enforcement. A federal appeals court has shot down the Consumer Financial Protection Bureau’s enforcement of Sec. 8 rules under the Real Estate Settlement Procedures Act (RESPA). The CFPB imposed a massive fine—$109 million—against a mortgage company for sending referrals to mortgage insurers that used its affiliated mortgage reinsurance business.
Back when HUD administered RESPA, such “tying” arrangements were considered fine, depending on how they were structured. But when CFPB took over RESPA enforcement, it said they weren’t fine and hit the company for illegal referrals. What’s more, it imposed its fine retroactively, so the company was on the hook for the arrangement even during the years HUD said it was legal.
NAR sent a friend-of-the-court brief to the appeals court that said such retroactive enforcement was wrong, and the court agreed. Not only did it require the CFPB to withdraw the fine, it said CFPB’s interpretation of Sec. 8 was incorrect. HUD’s was the correct one.
In another video segment, an NAR analyst explains why it’s going to take a few years before lenders will be able to make federally backed rural home loans quickly under a new direct endorsement program that Congress created for the Rural Housing Service. FHA already uses direct endorsement and NAR for a long time called on Congress to let RHS use it too for rural home loans. Congress agreed, but RHS doesn’t have the money to make the system changes it needs to make it happen, so even though RHS has the authority, it’s going to be around 2019 before quicker rural home loans happen.
Fixed-rate mortgages dropped this week, basically erasing last week’s spike. Thirty-year rates dipped below 3.5, its summertime average, offering even lower borrowing costs to would-be home buyers and refinancers.
“Mortgage rates continue to be relatively stable and at near record lows,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage fell 5 basis points week-over-week to 3.47 percent, erasing last week’s increase. At the same time, the 10-year Treasury yield ended the week relatively flat — up about 2 basis points.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 27:
- 30-year fixed-rate mortgages: averaged 3.47 percent, with an average 0.6 point, dropping 5 basis points from 3.52 percent last week. Last year at this time, 30-year rates averaged 3.76 percent.
- 15-year fixed-rate mortgages: averaged 2.78 percent, with an average 0.5 point, dropping slightly from last week’s 2.79 percent average. A year ago, 15-year rates averaged 2.98 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.84 percent, with an average 0.4 point, falling from last week’s 2.85 percent average. A year ago, 5-year ARMs averaged 2.89 percent.
For your remodeling clients, they may want to make sure they don’t end up redesigning a kitchen that’s too small compared to other homes in the area. However, the size of the kitchen may vary drastically by geographic location, home size, and home style, according to new research from the National Kitchen and Bath Association, in which researchers evaluated more than 3,000 home plans.
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The average size of a newly built single-family home’s kitchen is 161 square feet, or just under 13 feet by 13 feet, the study shows. However, some regions tend to offer much bigger kitchens.
The Middle Atlantic region, which includes New York and Pennsylvania, has the largest average kitchen size at 170 square feet, followed by the South Atlantic, which includes Florida and the Carolinas, at 166 square feet, and the West-South Central region, which includes Texas, at 165 square feet. Meanwhile, the smallest kitchens may be found in the West-North Central region, which includes the Dakotas, at 153 square feet, the study shows.
While larger homes tend to have larger kitchens, the scale of the increased kitchen size is not proportion to the overall home, the report notes. Homes that have great rooms tend to have slightly larger kitchens, but only by an average of 5 square feet.
The study found that single-story homes tended to have kitchens with an average of 151 square feet. Kitchens in multi-level homes, on the other hand, tended to have kitchens that average 174 square feet.
The median list price of properties nationwide zoomed to a new record for the month of October, reaching $250,000. That is 8 percent higher than a year ago,
Read more: Home Buyer Advantage Starts Now
“We are seeing evidence of stronger-than-normal demand this off-season, as buyers remain eager to make purchases,” says Jonathan Smoke, realtor.com®’s chief economist. “As a result, the number of homes for sale declined more in October than at any other point this summer, and left us with 11 percent fewer active listings than last October. That’s the biggest monthly inventory decline since July 2015.” Homes for sale in October are selling 2 percent more quickly than they did a year ago, according to realtor.com®’s data.
And a handful of markets are seeing the majority of that activity. Realtor.com®’s research team compiled its monthly list of the 20 hottest markets in the country. In these markets, homes are seeing high demand (as measured by listing views by market on realtor.com®) and getting quick sales (measured by days on the market).
California cities continue to dominate most of the top 20. However, a new city emerged this month’s list: Boston. The Boston metro area – which includes Cambridge, Newton, and parts of New Hampshire – leaped 17 spots this month to land in the top 10. Boston saw the median age of its inventory decrease by a full week.
The following are the 20 hottest U.S. markets in October, according to realtor.com®:
- San Francisco
- Vallejo, Calif.
- Fort Wayne, Ind.
- San Diego
- San Jose, Calif.
- Stockton, Calif.
- Columbus, Ohio
- Modesto, Calif.
- Santa Rosa, Calif.
- Sacramento, Calif.
- Eureka, Calif.
- Colorado Springs, Colo.