Let's Add Up The Data
We very rarely get
a week of economic data like the past week. We had a week of employment
releases, culminating in the release of the employment report on Friday. We
also had the Federal Reserve's Open Market Committee meeting last week. Add to
that the release of personal income and spending data for June and for good
measure add in the first estimate of the second quarter growth of the economy
(GDP). It is tough to sum up all that data in a short amount of time and indeed
it may take some time for the markets to fully absorb the data as well. But
let's give it a shot by asking the general question -- how did we do?
With regard to
second quarter growth, the preliminary number released on Wednesday was strong.
However, the 4.0% growth rate is subject to revision and it comes after a drop
of 2.1 % in the first quarter due to the harsh winter we experienced. Taken
together, the economy grew at less than a 1.0% rate during the first half of
the year and economists expect faster growth during the second half, but not
necessarily as strong as 4.0%. Meanwhile, the Fed's statement after their
meeting contained no surprises as they continue to lessen stimulus by paring
down on purchases of securities and were a bit more upbeat in their assessment
of the economy which gave the markets the idea that a rate increase will still
come down the road, but that "down the road" is probably closer than
it has been.
The big release was
supposed to be the jobs report on Friday. Actually the numbers released were
fairly tame. The 209,000 jobs created were close to expectations, but did not
exceed expectations. Even the increase in the unemployment rate from 6.1% to
6.2% was not seen as bad news because more Americans were participating in the
labor market which is a key component of confidence. The tame numbers served to
calm the markets which fell precipitously on Thursday because of fears that if
the positive GDP report was coupled with strong jobs growth, the Fed could
raise rates even sooner than expected.
Young people are starting to leave their parent’s home and move
out on their own. The Current Population Survey for 2013 showed a drop in the
percentage of 20-somethings living with parents, marking the first decline
since 2005. As of now, the percentage drop appears minimal: Those aged 18 to 24
living with parents or a related subgroup dropped from 56 percent to 55 percent
in one year. However, Brad Hunter, chief economist at Metrostudy, notes in a
Builder online article that the one-percentage-point decline represents 300,000
people who were previously living with their parents that are now looking for a
household of their own. Indeed, a recent report by Harvard University’s Joint
Center for Housing Studies predicts that 2.7 million more households will form
among people in their 30s over the next decade. First-time buyers usually make
up about 40 percent of home buyers. However, lately, the share has been in the
35 percent to 38 percent range, Hunter says. The delay in millennials branching
out on their own has greatly reduced household formation in recent years.
Household formation rates usually average 1.4 million per year. Lately, the
rate has been about 500,000 to 700,000 a year. “We are seeing some evidence
that young people who had moved in with their parents or relatives are now
finding the means and the motivation to move out and get their own place,”
Hunter notes. “While most of these newly-emerging twenty-somethings will be
going into rentals, the movement out of the parental home is nonetheless
expected to support a series of positive steps from rentals to entry-level
re-sales to entry-level new homes, and on up the ladder.” Source:
Builder
The average monthly
rent for an apartment increased in the most recent quarter to $1,099, up 0.8
percent from the first quarter of this year and up 3.4 percent year over year,
according to Reis Inc., a real estate research firm. It marked the 18th
consecutive quarter for rent increases at a time when income growth has mostly
been stagnant. All 79 U.S. metro areas that Reis tracks saw an increase in
effective rents, with coastal cities posting some of the highest rent growth in
the past year. For example, rents rose more than 6 percent in the past year in
San Francisco, San Jose, and Seattle, according to Reis. Other metros not
usually associated with high rent increases also saw a rise, such as
Charleston, S.C., and Nashville, Tenn., where each saw rents increase about 5
percent or more in the past year. "You have definitely seen that recovery
now spread to all of the major markets around the country, even if some of them
were laggards," Ryan Severino, an economist at Reis, told The Wall Street
Journal. While rents have been rising, household incomes have mostly been
stagnant. The median household income in 2012 was $50,017, compared to the 2007
peak of $55,627, according to U.S. Census data. Some relief may be in sight for
renters soon. Apartment vacancies in the second quarter were unchanged nationwide
at 4.1 percent, which could signal that supply is starting to catch up with
demand. The market is expected to add 180,000 multifamily units this year,
according to Reis.Source:
The Wall Street Journal
A new study
initiated by Smart Growth America says that creating dense, walkable
developments gives cities a fatter wallet. In Washington, D.C., cited as the
most walkable U.S. city, the most walkable parts take up less than one percent
of the area but contain almost half of the city's top wealth-generating square
footage. Smart Growth America says that while urban areas can contain drivable
communities and outer areas can encourage walking, a community with good
walkability will still feature "high density, a mix of real estate uses,
multiple transportation options, and the ability to serve the daily needs of
residents largely on foot," according to Gizmodo.com writer Alissa Walker. Source:
Gizmodo.com
No comments:
Post a Comment