Affordable Housing Category Archives

Economic & Fixed Income Insights, August 15, 2018

Homebuilders, builder sentiment fell to 67 in August, the lowest level since September 2017. The housing market has been softening for the last several months, as buyers are unable to find affordable homes. Lingering geopolitical tensions and poor performance from tech stocks drove bond yields lower for the week.  The 10-year UST retreated 7 basis points to yield 2.90%, and the 30-year UST finished 5 basis points lower to 3.07%.  Municipals underperformed Treasuries across the yield curve.  The 10-year MMD was 3 basis points lower to 2.45% and the 30-year MMD was 2 basis points lower to 3.04%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of August 14, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic & Fixed Income Insights, August 8, 2018

The housing market continues to struggle as home prices continue to rise, along with mortgage rates. Total mortgage application volume fell 3% from the previous week, and 17% from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted report. Bond yields finished slightly higher for the week in anticipation of fresh inflation data Thursday and Friday. The 10-year UST ticked up 1 basis point to yield 2.97%, and the 30-year UST finished 4 basis points higher to 3.12%.  Municipal yields trended higher in tandem with Treasuries.  The 10-year MMD was 3 basis points higher for the week to 2.48% and 30-year MMD was 5 basis points higher to 3.06%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of August 7, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic and Fixed Income Insights, August 1, 2018

The Federal Reserve upgraded its assessment of the US economy on Wednesday, but left its benchmark rate unchanged. However, the Fed is widely expected to approve an increase at its September meeting. In other economic news, the long list of housing headwinds is finally taking its toll on potential home buyers. According to Redfin, housing demand fell 9.60% in June, compared with June 2017. The lack of demand can be attributed to rising interest rates and home prices, both of which weaken affordability. Bonds yields were little changed in advance of the latest monetary policy announcements from the Bank of England, Bank of Japan, and the U.S. Federal Reserve.  The 10-year UST finished just 1 basis point higher to yield 2.96%, while the 30-year UST was unchanged at 3.08%.  In the municipal market, 10-year MMD was 2 basis points higher for the week and 30-year MMD was 3 basis points higher.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of July 31, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

Economic and Fixed Income Insights, July 25, 2018

Sales of previously owned U.S. homes fell for the third straight month in June, indicating a shortage of affordable listings and rising prices continue to cool demand, according to the National Association of Realtors. There is a persistent shortage of available listings to choose from, while property prices are outpacing wages. In addition, borrowing costs have also increased this year. In the bond markets, investor optimism in corporate earnings saw yields rise as equities rebounded.  The benchmark 10-year UST  jumped 9 basis points to yield 2.95%, and the 30-year UST finished 11 basis points higher to yield 3.08%.  Municipal yields also trended higher with the 10-year MMD up 2 basis points to yield 2.43% and the 30-year MMD up 6 basis points for the week to yield 2.98%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of July 24, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

Economic and Fixed Income Insights, July 11, 2018

US wholesale prices rose in the 12 months ended in June by the most since November 2011 as the costs of services accelerated, according to a report released by the Labor Department. The June index for final demand services climbed 0.4% from a month earlier and 2.8% from the same month a year ago. While the consumer price index – due Thursday – is considered a more important indicator of inflation, producer prices help provide insights into the direction of input costs that businesses are facing.  Bond yields held steady over most of the holiday shortened week.  The benchmark 10-year UST ticked up just 2 basis points to yield 2.85%, and the 30-year UST was unchanged at 2.96%.  Municipal yields declined minimally with both the 10-year and 30-year MMD down 2 basis points for the week to yield 2.43% and 2.91% respectively.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of July 10, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

Harvard Joint Center for Housing Studies Releases its Report on the State of the Nation’s Housing

On June 19, the Harvard University Joint Center for Housing Studies (JCHS) held an address and panel discussion at the National Press Club in Washington D.C. to formally present its 30th annual State of the Nation’s Housing report. Since 1988, the report has offered invaluable, applicable information on the housing industry for policymakers, investors, and developers. A webcast of the event and a PDF of the report can be found here.

An address from Senior Research Associate Daniel McCue touched on the report’s main themes and significant housing industry trends. On a positive note, the overall home ownership rate increased for the first time in several years, which parallels the recent decrease in the number of rent-paying households. But, besides these statistics, the report also finds some dirt. Home ownership rates for young adults and African-Americans are at historic lows. There are also other points of concern in line with the housing industry’s challenges of the last thirty years. The report points out the lack of necessary for-sale inventory to meet the rising demand from new households headed by millennials and immigrants. A further challenge to meeting this supply is within rising costs of labor supply and materials. The Center estimated that from 2016-2017, overall input prices rose 4%, softwood lumber prices rose by 13%. In addition, the rise of mortgage payment and rent prices are outpacing wage growth at an alarming rate, leaving many renters cost-burdened. More people are even paying over 50% of their monthly income on housing. Home prices are close to pre-recession levels, but this increase is pressuring the slowly growing incomes of consumers and perpetuating a need to develop more affordable housing.

In regards to developing this need, the report contains some interesting details. The amount of starts fell 9.7% from 2016 to 354,100 units, and this decrease was especially apparent in the Midwest, with starts falling by over 20%. On a more positive note, the amount of completed units rose by 11% to 357,600, and the amount of units under construction is at a similar level to that of 2016, the highest level of units under construction since the 1970’s. A majority of these Multifamily units are being built within urban centers, but there is still a great need for more units specifically built as affordable housing. In fact, the center measures a shortage in housing of 7.2 million units for Very Low Income renters, who earn less than 50% of an area median income. These troubling signs of a lower level of starts and this demand are symbols of a nationwide crisis that requires a great amount of focus and insight to solve.

A panel consisting of Former HUD Secretary Shaun Donovan, the Federal Reserve Community Affairs Director, the President of the Lincoln Institute of Land Policy, and the Director of the JCHS built off from the address with an insightful discussion. Highlights from the panel included observations on the rise of urban gentrification crowding out affordable housing to the outskirts of metropolitan areas, the tendency of baby boomers to age-in-place yielding a greater need to provide ADA-accessible housing, the need to concentrate on absolving zoning and land issues as a solution to provide more urban housing supply, and the stark contrast between the undeveloped market for necessary shelter and the saturated housing market centered on high-value investment.

The rigor and insight of the session exemplified the utility and importance of conducting empirical research to evaluate the housing market and related public policy. If policymakers and developers apply the findings of the Report into their work, it is much more likely that findings of the report published thirty years from now will be more optimistic.

Economic and Fixed Income Insights, June 27, 2018

Despite the recent pullback in interest rates, homebuyers are dropping out of the competitive housing market. Total mortgage application volume fell 4.90%, seasonally adjusted, last week compared to the previous week, according to the Mortgage Bankers Association. More new home listings are coming on the market this summer, but potential buyers are faced with high prices and multiple offers. In other economic news, fears of an all-out trade war intensified further this week as President Trump ordered his administration to draft plans for additional tariffs on Chinese imports. Although the potential impact from a trade war is extremely damaging for everyone involved, the probability of such an event still remains low.  In the bond markets, treasuries were mostly steady as investors wait for further action between the world’s two largest economies. The benchmark 10-year UST dipped just 2 basis points lower to yield 2.88% while the long bond was unchanged at 3.03%.  Municipal bonds ticked up slightly.  The 10-year MMD sits at 2.49%, 3 basis points higher for the week, and the 30-year MMD finished just 1 basis point higher to 2.97%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of June 26, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic & Fixed Income Insights, June 20, 2018

Presented by Stifel, Nicolaus & Company, Inc.

Housing starts ran at a seasonally adjusted annual 1.35 million rate in May, according to the Commerce Department. The reading edged past the forecast among most economists. At a 1.35 million pace, housing starts saw the fastest activity since 2007. One weak spot in the report was building permits, which foreshadow future activity. They were at a 1.3 million pace, down 4.6% for the month. In other housing news, weekly mortgage application volume increased 5.1% last week, according to Mortgage Bankers Association. The gain was driven primarily by applications to refinance home loans, which rose 6% for the week.  Turning to the markets, bond yields fell on reignited trade tensions between the US and China. Treasuries rallied with other safe havens leading both the 10-year and 30-year UST yields 6 basis points lower for the week.   In line with their taxable counterparts, municipal bond yields also trended downward.  The 10-year MMD finished 2 basis points lower to yield 2.46% while the 30-year MMD was 4 basis points lower to 2.96%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of June 19, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic & Fixed Income Insights, June 13, 2018

Presented by Stifel, Nicolaus & Company, Inc.

The Federal Reserve hiked its benchmark short-term interest rate 0.25% this afternoon and indicated that two more increases are likely in store ahead. The move pushes the fed funds target rate to 1.75%-2.0%. In other economic news, the Producer Price Index for final demand rose 0.50% in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.10% in April and 0.30% in March. On an unadjusted basis, the final demand index moved up 3.10% for the 12 months ended in May, the largest 12-month increase since climbing 3.10% in January 2012. In the bond markets, yields were largely flat for the week leading up to the Fed’s rate decision. The benchmark 10-year UST climbed 3 basis points to yield 2.96%, and the 30-year UST finished just 1 basis point higher to yield 3.09%.  Municipal bonds showed slightly more volatility with the 10-year MMD 4 basis points higher for the week, and the 30-year MMD 6 basis points higher to 3.00%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of June 12, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

Economic & Fixed Income Insights, June 6, 2018

Presented by Stifel, Nicolaus & Company, Inc.

Last week, while many market participants extended the long Memorial holiday weekend, a few economic reports were posted. On Wednesday, the final revisions showed the U.S. economic grew at a 2.2% pace in Q1, down from the initial estimate of 2.3%.  On Thursday, personal income rose 0.3% and personal spending rose 0.6% in April, according to Bloomberg. Also on Thursday, the personal consumption expenditures (CPE) index rose 0.2% in April, following a flat reading in March. In the bond markets, yields rose as investors digested a strong jobs report Friday and an equity rally led by technology stocks.  For the week, the 10-year UST climbed 15 basis points to yield 2.93%, and the 30-year UST finished 10 basis points higher at 3.08%.  Municipal yields were less volatile.  The 10-year MMD finished just 3 basis points higher to 2.44% while the long bond finished 7 basis points higher to 2.94%.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of June 5, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018