economy Tag Archives

President Biden Unveils $1.9 Trillion American Rescue Plan

President Joe Biden recently unveiled his COVID-19 and economic recovery plan. Of interest to our members, the sweeping $1.9 trillion plan calls for another round of $1,400 stimulus payments to individuals, an eviction moratorium on federal guaranteed mortgages until September 30, 2021, an additional $30 billion for rental assistance ($5 billion of which is dedicated to home energy and water costs and arrears), $5 billion in emergency assistance to help secure housing for people experiencing or at risk of homelessness.

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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 — April 24, 2018

Economic and Fixed Income Insights

Earlier this week, the yield on the 10-year U.S. note hit 3% for the first time since 2014 as investors focused on strong corporate earnings and the prospect of higher inflation. The 10-year yield is a barometer that influences borrowing costs for consumers, corporations and state and local governments. Bond yields have slumped near historic lows in recent years on lower inflation and sluggish economic results. A rise to 3% signifies in part that the US economy is returning to near normal conditions. In other economic news, U.S. new home sales increased 4% from the prior month to a seasonally adjusted rate of 694,000 units.  Housing demand has remained strong in recent months as buyers feel confident in the overall tone of the economy.  As borrowing costs rise, demand will likely fall as the median price of homes, propped up by a supply shortage, is rising faster than wages.  In the bond market, as noted above, the 10-year UST is making headlines, but taxable and tax-exempt rates all along the curve are up significantly.  The 10-year UST was 17 basis points higher for the week, and the long bond was up 16 basis points.  Tax-exempt rates showed similar volatility with the 10-year MMD up 10 basis points and the 30-year MMD up 12 basis points

Interest Rate Observations


Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of April 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

Making Sense of Jobs and Employment Data

Wall Street expectations were running high earlier this month in advance of the Bureau of Labor Statistics (BLS) March 2018 employment report. On the heels of February’s strong numbers and a string of seven straight years of private sector gains, investors projected 185,000 new jobs would be added to payrolls, and the unemployment rate would drop from its 5-month 4.1% plateau to 4.0%.

But, the anticipated April 6 report provided some lower than expected numbers—only 103,000 jobs were added in March and the unemployment rate stayed at 4.1% for a sixth consecutive month. Still there is no consensus if the news was good or bad for the economy with varied reactions from different parties.

While economists and politicians continue their debates, we cannot lose sight of the importance of these numbers to NH&RA members. In this article, I provide additional color around the monthly jobs numbers.

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