Quarter of Turmoil?
We described the last quarter as busy. This quarter may turn out to be more than just busy. Starting out with an impeachment inquiry, very weak manufacturing data and a mixed jobs report — the next two-plus months could be very interesting to watch. Certainly, the Federal Reserve Board will be taking note of the reaction the markets have to what happens from here. And if the stock market’s first few days of activity in October are any indication, there will be plenty of reactions.
Overall, the stock market has held up pretty well this year, despite heightened volatility. Stocks have certainly been helped by lower interest rates and an economy which is slowing, but still growing at a healthy pace. If the economy does continue to soften, we will lose one of these factors, but lower rates should continue to support the market and the economy as well.
One area of the economy that is starting to shine, while the overall economy slows down? The real estate market is picking up, with higher housing starts and existing home sales. This is not a surprise, because real estate benefits most from lower long-term interest rates. There is a lot of latent demand in this sector and any condition which increases affordability can spur this demand into action. That is exactly what lower rates are doing – spurring not only purchase demand, but refinancing as well.
More than half of Americans admitted they do not know the minimum required down payment needed to purchase a home. The findings of Bankrate’s new research revealed that 51% of Americans have no clue when it comes to a home’s down payment. Twenty-eight percent guessed that the standard recommended amount of 20% or more of the purchase price is needed. Meanwhile, 2% calculated that the minimum requirement is between 0% to 5% of the price, depending on the loan program. Generally, the respondents’ perceptions indicated that consumers were not entirely aware of the various affordable loan programs, according to Bankrate. Deborah Kearns, an analyst at Bankrate, said — “Many homebuyers don’t realize that conventional loans require just 3% of the purchase price as a down payment and some VA and USDA loans don’t require anything at all,” Kearns said. “Local first-time homebuyer assistance programs can also lower your upfront, out-of-pocket costs substantially at closing.” Source: The Wall Street Journal
The average FICO score stands at 706, a record high, said Ethan Dornhelm, vice president of scores and predictive analytics at FICO. That compares with 686 at the 2009 end of the Great Recession and it eclipses the 690 at the 2006 height of the housing bubble. The key drivers are U.S. economic expansion that has propelled job growth and an increase in consumer education about protecting and improving scores, Dornhelm said in a blog post. In addition, the passage of time is helping to remove the credit scars from events that happened during the financial crisis, he said. “Consumers who suffered financial misfortune during the Great Recession have over the past few years had the associated missed payments from that time period purged from their credit file, in accordance with the Fair Credit Reporting Act,” he said. Measuring different credit events, the biggest improvement between April 2009 and April 2019 was the timeliness of housing, Dornhelm said. A decade ago, 7.2% of the population had been 90 days or more late on a home loan payment within the last two years. By April, it had dropped to 2.8%. Also showing big improvement was the percentage of the population who had been 90 days or more past due on a credit card in the last two years. A decade ago, it was 13%, and in April it was 8.6%. The jump in FICO scores was due to “score improvement, not score inflation,” Dornhelm said. Source: HousingWire
More than 1 in 4 Americans are not living in the type of location they would choose to. A survey by NerdWallet shows that 26% would prefer to switch their location, whether they are currently living in a city, suburb, small town or rural area, but many are constrained by the finances. “When it comes to where we live, some are cursed with more options than opportunities — it’s not as simple as packing up and going,” says NerdWallet’s Holden Lewis. “We long to leave our sleepy suburbs for the exciting city, or we dream of ditching the city for a quiet small town. But moving is expensive — you have your job and a new cost of living to think of, and you’re often leaving friends and family behind.” The survey allowed a free view of what respondents believed was a city, suburb, small town, or rural area, to determine whether they are living in their dream location or not. However, 69% of those not living where they want said they would do something to facilitate their dream including starting work or taking a second job (38%) or give up all leisure travel (28%). Source: Nerd Wallet