Listings Skyrocket!

Just kidding. Listings are still at an all time low of 440 residential listings in Indian River County with demand continuing to be very high.

Click link to see the chart showing listings, under contract, sold and absorption rate.

I’ve been saying this for months now.

Fannie Mae ‘Meaningfully Downgrades’ 2021 Home Sales Forecast

Citing new-home supply problems and tight inventory, Fannie’s latest forecast calls for a 4.2% uptick in 2021 home sales – a cut from 6.3% predicted a month ago.

WASHINGTON – Fannie Mae decided this month that listings shortages and constraints on home builders hurt home sales and push up home prices and rents. It says the situation could fuel inflation and compel the Federal Reserve to adopt a more aggressive monetary policy stance, according to the latest monthly forecast by economists with Fannie Mae’s Economic and Strategic Research Group.

The economists say they “meaningfully downgraded” their forecast for second- and third-quarter home sales, “largely due to the ongoing lack of available listings and a softening pace of new construction due to supply constraints affecting home builders.”

In May, they predicted that home sales would rise by 6.3% in 2021 to 6.868 million homes, but they now forecast that 2021 sales will grow by a more modest 4.2% to 6.732 million. Recent declines in pending home sales and purchase mortgage applications “have been more pronounced than we previously expected,” Fannie Mae researchers say.

Rather than 16.3% growth in new home sales, Fannie Mae now estimates that builders will sell 919,000 new homes in 2021, up 11.8% from a year ago. Sales of existing single-family homes, condos, and co-ops are now predicted to grow by 3.1% to 5.81 million, instead of 4.8% as projected in May.

Fannie Mae also anticipates that single-family housing starts will fall by 3.7% next year to 1.15 million because of labor scarcity and a lack of buildable lots.

In addition, Fannie Mae isn’t expecting a notable increase in listings after the foreclosure moratorium ends, “in part due to large gains in homeowner equity this past year – but we anticipate some homes will be put on the market for sale.”

Source: Inman (06/16/21) Carter, Matt

Airbnb: No Listings Coming from Pandemic-Era Evictions

Airbnb wants to “send a strong message” that helps keep people in homes and won’t accept new short-term rentals if told a tenant was evicted for nonpayment of rent.

NEW YORK – The CDC’s eviction moratorium is set to expire June 30, and property owners could turn some of their newly empty units into short-term rentals rather than looking for a long-term tenant.

But Airbnb says it’s taking steps to prevent that from happening.

The short-term rental site announced a new COVID-19 Renter Protection Policy. Under that policy, it will work with cities to ban property owners from listing any property if their tenant was evicted due to nonpayment of rent. In doing so, Airbnb wants to prevent short-term rentals from occurring quickly in units where the tenant had been protected by the CDC moratorium.

Airbnb plans to have the policy in place until the end of the year, but to implement it, cities must participate. Airbnb says it will ban such listings “when a city notifies us” that those listings are located at rental properties that were part of the CDC moratorium.

“By working with cities to prevent landlords from using our marketplace to profit from removing a vulnerable long-term tenant from their home based on nonpayment of rent, we believe we can send a strong message that will help keep people in their homes at this critical time,” the company notes in a blog post.

More than 11 million Americans are behind on their rent, according to an analysis by The Center on Budget and Policy Priorities.

Source: “Airbnb Commits to Help Protect Renters as CDC Eviction Moratorium Expires,” Airbnb (June 15, 2021) and “Airbnb Wants to Ban Listings of Apartments Freed Up by Post-Moratorium Evictions,” Fast Company (June 15, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Not yet, But When?

Fed Accelerates Plans to Raise Interest Rates – But Not Yet

By Paul Davidson

Low rates directly keep adjustable-rate loans low and help, indirectly, fixed-rate loans. At one time, the Fed had no rate-hike plans until 2024; now it’s two in 2023.

WASHINGTON – With the economy and inflation set to surge this year as the nation emerges from the COVID-19 recession, the Federal Reserve is starting to ease back from pandemic era policies aimed at jolting growth.

Citing an upgraded economic outlook and a spike in inflation, the Fed on Wednesday held its key interest rate near zero and vowed to maintain its bond buying stimulus, but it’s now forecasting two rate hikes in 2023, up from none previously.

Fed officials foresee its benchmark short-term rate at a range of 0.5% to 0.75% in 2023, according to their median estimate. While most of the officials said they want to hold the rate near zero through next year, only five foresee rates at that level in 2023. Two prefer one rate increase in 2023, while three envision two hikes and eight foresee an even higher rate by then.

Fed officials “are more comfortable that (the economic conditions for raising rates) will be met somewhat sooner than previously anticipated,” Fed Chair Jerome Powell said at a news conference. “We’re going to be in a strong labor market pretty quickly here.”

“Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the Fed said in a statement after a two-day meeting.

Yet Powell noted Fed officials’ rate forecasts are merely estimates, adding that “liftoff is well into the future.” In its statement, the Fed reiterated it would keep its benchmark short-term rate near zero until the economy returns to full employment and inflation has risen above its 2% target “for some time.”

Powell said the Fed’s focus in the short term is on when to begin tapering its bond purchases. The central bank repeated that it would continue to purchase $120 billion a month in Treasury bonds and mortgage-backed securities to hold down long-term rates “until substantial further progress has been made toward” the Fed’s employment and inflation goals.

Powell said the Fed discussed reducing the purchases this week and would provide more guidance “at a future meeting.”

‘A ways from our goal’

“The economy has made progress but it’s still a ways from our goal of substantial progress,” he said, declining to provide a timetable for tapering. Some top economists think the Fed will begin paring back purchases early next year.

The Fed also boosted its economic forecast, predicting growth of 7% this year, up from 6.5% at its March meeting, before slowing to a still healthy 3.3% pace in 2022. It projects unemployment will fall from 5.8% to 4.5% by year-end. Fed officials believe a core inflation measure that strips out volatile food and energy items will close the year at 3% before dropping back down to 2.1% in 2022.

While Powell told reporters that officials still believe the current climb in inflation is “transitory,” he added, “Inflation could turn out to be higher and more persistent than we expect.” That could force the Fed to pull back its stimulus measures earlier.

The central bank is grappling with conflicting signals. The U.S. economy is close to completely reopening, COVID-19 cases have plunged, and more than half the adult population is fully vaccinated. Americans also have saved about $2.5 trillion in aggregate as a result of government stimulus checks and a year of COVID-19 restrictions and are they’re eager to bust out.

Yet employment growth, while brisk by historical standards, has been less robust than anticipated, with an average 418,000 jobs a month added in April and May, about half the tally economists expected.

The shortfall largely has been blamed on worker shortages, with many Americans still caring for children who are distance-learning from home or preferring to stay on enhanced unemployment insurance. Those hurdles are likely to fade by fall as schools reopen and the extra jobless benefits run out.

Inflation heats up

Meanwhile, however, a core measure of inflation that the Fed watches closely increased 3.1% annually in April, up from 1.9% the prior month and well above the Fed’s 2% target. Fed officials largely have downplayed the rise as a temporary byproduct of a reopening economy and supply-chain bottlenecks that have caused myriad product shortages.

Powell noted most of the price increases are for products and services related to the reopening economy, such as air fares and used cars, which have been plagued by shortages tied to manufacturing snarls.

Some analysts believe the price increases could be more enduring as the labor shortages push up wages and lead consumers and businesses to expect stronger inflation.

Before the Fed’s statement was released, Goldman Sachs reckoned it was too soon for the central bank to hint at tapering the bond buying because the labor market “has not yet come far enough.”

Copyright 2021,, USA TODAY

I found much of this article insulting, but I’ll leave this to you to process.

Millions Fear Eviction as U.S. Housing Crisis Worsens

By Ken Sweet

Groups that want to see an end to the eviction-foreclosure ban agree with housing advocacy groups in one important way: They both say the U.S. needs to do something about housing production because the U.S. soon won’t have enough units for its growing population.

NEW YORK (AP) – More than 4 million people say they fear being evicted or foreclosed upon in the coming months, just as two studies released Wednesday found that the nation’s housing availability and affordability crisis is expected to worsen significantly following the pandemic.

The studies come as a federal eviction moratorium is set to expire at the end of the month. The moratorium has kept many tenants owing back rent housed. Making matters worse, the tens of billions of dollars in federal emergency rental assistance that was supposed to solve the problem has not reached most tenants.

The housing crisis, the studies found, risk widening the housing gap between Black, Latino and white households, as well as putting homeownership out of the reach of lower-class Americans.

“The unprecedented events of 2020 both exposed and amplified the impacts of unequal access to decent, affordable housing,” wrote researchers at the Joint Center for Housing Studies at Harvard University. “These disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing and facing possible eviction or foreclosure.”

The reports were released on the same day as the Census Bureau’s biweekly Household Pulse Survey came out. It showed that nearly 4.2 million people nationwide report that it was “likely or somewhat likely” they will be evicted or foreclosed upon in the next two months.

Many of those tenants are waiting to see what becomes of the Centers for Disease Control and Prevention measure, which is set expire June 30. Housing advocates are pressuring President Joe Biden’s administration to extend it. They argue extending it would give states the time to distribute more than $45 billion in rental assistance and protect vulnerable communities from Covid-19. The rental assistance has been slow to reach tenants.

“The latest data confirm two things – emergency rental assistance is very slow to reach renters in need, and millions of renters remain behind on rent and at heightened risk of evictions,” Diane Yentel, president of the National Low-Income Housing Coalition, said in an email interview. “President Biden must extend the eviction moratorium to give more time for rental assistance to reach renters and landlords and to avoid a historic wave of evictions this summer and fall.”

The reports by Harvard University and the National Association of Realtors® come from different perspectives, but ultimately reach the same conclusion: the United States isn’t building enough housing to address population growth, causing record low home availability, and rising home prices are putting homeownership out of reach of millions of Americans.

The housing crisis, the studies also found, risk widening the housing gap between Black, Latino and white households, as well as putting homeownership out of the reach of lower-class Americans.

Without substantial changes in homebuilding and home affordability, both reports say, the result will be a more-or-less permanent class of renters contrasted with what will likely be a mostly white class of homeowners. While these problems were known before the coronavirus pandemic, the economic impact of the pandemic exacerbated the problem, the reports say.

“The unprecedented events of 2020 both exposed and amplified the impacts of unequal access to decent, affordable housing,” researchers at Joint Center for Housing Studies at Harvard University wrote. “These disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing and facing possible eviction or foreclosure.”

A separate study commissioned by the National Association of Realtors released Wednesday found that the U.S. housing market needs to build at least 5.5 million new units to keep up with demand and keeping homeownership affordable over the next 10 years. That’s on top of the roughly 1.2 million units built per year on average, or a roughly 60% increase in home construction for the next decade, just to keep up with demand.

“The scale of underbuilding and the existing demand-supply gap is enormous and will require a major national commitment to build more housing of all types by expanding resources, addressing barriers to new development and making new housing construction an integral part of a national infrastructure strategy,” wrote Kenneth Rosen, David Bank, Max Hall, Scott Reed and Carson Goldman with the Rosen Consulting Group, in its report to NAR.

The National Association of Realtors report points out several geographies that require substantial increases in homebuilding; not surprisingly many parts of California and the West are on the top of the list. NAR also says substantial homebuilding is required in Southern Florida, as well as the Northeast, particularly the New York-New Jersey metropolis region.

Without additional housing, an increasing share of Americans are likely to become renters in the coming years. While renting is not necessarily a bad thing since it provides more flexibility, homeownership has been the primary driver of wealth generation in the U.S. since World War II. Home equity is often a way for Americans to have a financial safety net at times of economic trouble, as seen in the pandemic.

These problems get worse when broken out by racial backgrounds. Black and Latino homeowners have less in savings than their white counterparts. White potential homeowners also have generational wealth to potentially tap in the form of a down payment.

“The diverging circumstances between those with the resources to weather the economic shutdowns and those struggling to simply stay afloat thus widened already large inequalities in income and wealth,” said the Harvard researchers.

Outside of a massive increase in homebuilding, researchers at Harvard pointed to government home affordability programs as likely the best solution to address the problem long term.

“Any of a number of new proposals to provide down payment assistance to socially disadvantaged buyers would potentially bring millions of low-income households and households of color into homeownership.”

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Daily MLS Stats

Today we are at an all time low in Residential Listing for Indian River County. I’ve been tracking these numbers every day at the same to and today we hit 438 Residential listings (including condo’s) for all of Indian River County, FL.

Click the link to see the chart:

Inflation Is Up – So Why Aren’t Mortgage Rates?

Investors fear inflation and mortgage rates usually rise. But investors appear to believe the Fed when it says the U.S.’s current bout of inflation is only temporary.

NEW YORK – The 30-year fixed-rate mortgage averaged 2.96% for the week ending June 10, according to Freddie Mac’s weekly report – down three basis points from the previous week.

The 15-year fixed-rate mortgage fell four basis points to an average of 2.23%. The five-year Treasury-indexed adjustable-rate mortgage averaged 2.55%, down nine basis points from the prior week.

Mortgage rates usually move roughly in tandem with long-term bond yields, including the 10-year Treasury, and the past week was not an exception. However, it’s not common to see inflation rising without stocks falling at the same time.

“The Freddie Mac fixed rate for a 30-year loan dropped along with the 10-year Treasury yield this week, as investors seem to accept the Federal Reserve’s view that the current inflation is temporary, and a patient monetary response continues to be warranted,” says chief economist Danielle Hale. “Housing bubble and crash worries are common, even showing up in a record-low share of people saying it’s a good time to buy a home.”

Source: MarketWatch (06/10/21) Passy, Jacob

Mortgage Rates Keep Hovering but Down Slightly This Week

The 30-year, fixed-rate mortgage averaged 2.96% this week, down marginally from last week’s 2.99% as it remains in under-3% territory.

By Kerry Smith

MCLEAN, Va. – The 30-year fixed-rate mortgage (FRM) averaged 2.96% this week, according to Freddie Mac’s weekly survey. It’s a slight drop from last week when the FRM came close to the 3% mark, averaging 2.99%.

“The economy is recovering remarkably fast, and as pandemic restrictions continue to lift, economic growth will remain strong over the coming months,” says Sam Khater, Freddie Mac’s chief economist.

“Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates,” Khater adds. “However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.”

For the week of June 10, 2021:

  • The 30-year fixed-rate mortgage averaged 2.96% with an average 0.7 point, down from last week’s average 2.99%. A year ago, it averaged 3.21%.
  • The 15-year fixed-rate mortgage averaged 2.23% with an average 0.6 point, down from last week’s 2.27%. A year ago, it averaged 2.62%.
  • A 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.55% with an average 0.2 point, down from last week’s 2.64%. A year ago, it averaged 3.10%.

© 2021 Florida Realtors®

Inflation: Jump in Prices Tightens Squeeze on U.S. Consumers

It just got harder to save for a down payment, but the Fed still sees price spikes as temporary – the result of interrupted supply chains and soaring post-pandemic demand.

By Martin Crutsinger

WASHINGTON (AP) – American consumers absorbed another surge in prices in May – a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.

The May rise in consumer prices that the Labor Department reported Thursday reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.

The increased consumer appetite is bumping up against a shortage of components, from lumber and steel to chemicals and semiconductors, that supply such key products as autos and computer equipment, all of which has forced up prices. And as consumers increasingly venture away from home, demand has spread from manufactured goods to services – airline fares, for example, along with restaurant meals and hotel prices – raising inflation in those areas, too.

In its report Thursday, the government said that core inflation, which excludes volatile energy and food costs, rose 0.7% in May after an even bigger increase in April, and has risen 3.8% over the past 12 months. Among specific items, prices for used cars, which had surged by a record 10% in April, shot up an additional 7.3% in May and accounted for one-third of last month’s overall price jump.

But the price increases in May were widespread in a variety of categories, including household furnishings, clothing and airline fares. Food prices rose by 0.4. Energy costs were unchanged, but they’re still up 28.5% from a year ago.

From the cereal maker General Mills to Chipotle Mexican Grill to the paint maker Sherwin-Williams, a range of companies have been raising prices or plan to do so, in some cases to make up for higher wages that they’re now paying to keep or attract workers.

The inflation pressures, which have been building for months, are not only squeezing consumers but also posing a risk to the economy’s recovery from the pandemic recession. One risk is that the Federal Reserve will eventually respond to intensifying inflation by raising interest rates too aggressively and derail the economic recovery.

The Fed, led by Chair Jerome Powell, has repeatedly expressed its belief that inflation will prove temporary as supply bottlenecks are unclogged and parts and goods flow normally again. But some economists have expressed concern that as the economic recovery accelerates, fueled by rising demand from consumers spending freely again, so will inflation.

The question is, for how long?

“The price spikes could be bigger and more prolonged because the pandemic has been so disruptive to supply chains,” Mark Zandi, chief economist at Moody’s Analytics, said in advance of Thursday’s inflation report.

But “by the fall or end of the year,” Zandi suggested, “prices will be coming back to earth.”

That would be none too soon for consumers like Carmela Romanello Schaden, a real estate agent in Rockville Centre, New York. Schaden said she’s having to pay more for a range of items at her hair salon. But she is feeling the most pain in the food aisle. Her monthly food bill, she said, is now $200 to $250 for herself and her 25-year-old son – up from $175 earlier in the year.

A package of strip steak that Schaden had normally bought for $28 to $32 jumped to $45. She noticed the increase right before Memorial Day but bought it anyway because it was for a family picnic. But she won’t buy it again at that price, she said, and is trading down to pork and chicken.

“I’ve always been selective,” Schaden said. “When something goes up, I will switch into something else.”

So far, Fed officials haven’t deviated from their view that higher inflation is a temporary consequence of the economy’s rapid reopening, with its accelerating consumer demand, and the lack of enough supplies and workers to keep pace with it. Eventually, they say, supply will rise to match demand.

Officials also note that year-over-year gauges of inflation now look especially large because they are being measured against the early months of the pandemic, when inflation tumbled as the economy all but shut down. In coming months, the year-over-year inflation figures will likely look smaller.

Still, last month, after the government reported that consumer prices had jumped 4.2% in the 12 months ending in April, Fed Vice Chair Richard Clarida acknowledged; “I was surprised. This number was well above what I and outside forecasters expected.”

And the month-to-month readings of inflation, which aren’t subject to distortions from the pandemic have also been rising since the year began.

Some economists say they fear that if prices accelerate too much and stay high too long, expectations of further price increases will take hold. That, in turn, could intensify demands for higher pay, potentially triggering the kind of wage-price spiral that bedeviled the economy in the 1970s.

“The market is starting to worry that the Fed may be going soft on inflation, and that could let the inflation genie out of the bottle,” said Sung Won Sohn, a professor of economics and finance at Loyola Marymount University in Los Angeles.

Rising commodity costs are forcing Americans to pay more for items from meat to gasoline. Prices for corn, grain and soybeans are at their highest levels since 2012. The price of lumber to build homes is at an all-time high. More expensive commodities, such as polyethylene and wood pulp, have translated into higher consumer prices for toilet paper, diapers and most products sold in plastic containers.

General Mills has said it’s considering raises prices on its products because grain, sugar and other ingredients have become costlier. Hormel Foods has already increased prices for Skippy peanut butter. Coca-Cola has said it expects to raise prices to offset higher costs.

Kimberly-Clark, which makes Kleenex and Scott toilet paper, said it will be raising prices on about 60% of its products. Proctor & Gamble has said it will raise prices for its baby, feminine and adult care products.

This week, Chipotle Mexican Grill announced it was boosting menu prices by roughly 4% to cover the cost of raising its workers’ wages. In May, Chipotle had said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June.

“There is stronger demand for hotel rooms, air travel, restaurant dining,” said Gus Faucher, chief economist at PNC Financial. “Many businesses are also facing upward pressure on their costs such as higher wages.”

Gregory Daco, chief U.S. economist at Oxford Economics, noted that in some cases, a jump in the price of goods such as autos is raising the price of car rental services.

“It is going to be a muggy summer on the inflation front,” Daco said. “There will be a pass-through from higher goods prices to higher prices for services.”

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. AP Business Writer Anne D’Innocenzio contributed to this report from New York.