Benefits of a Slow Down
Right now the markets are warily eyeing a possible slowdown in the economic
recovery. While we can't tell you if we are indeed in the middle of another
pause, we can tell you that we are already reaping some benefits of even
the hint of a pause. What are these benefits? Oil prices, interest rates
and gold prices have all fallen. It is easy to see the benefits of lower
gas prices and rates with regard to the economy. Lower gas prices give
consumers more money to spend. Lower rates encourage refinancing as well as
home and automobile purchases. The real estate and auto industries were
already in recovery mode before interest rates eased back. For example, in
March nearly 1.5 million cars and trucks were sold, a number not seen since
May 2007. In addition, housing starts broke the 1.0 million mark in March,
the strongest performance since June of 2008. On the other hand, why should
we care that gold prices are dropping?
Of the three, the move in gold has been much steeper than oil or rates.
When the financial crisis hit five years ago, there was a threat that the
financial system would collapse and move us into a depression. Gold soared
in response to this threat. Even during the recovery -- every time we had a
pause -- gold prices stayed strong because there was a threat of a double
dip recession. Today, there is a possibility of a pause, but gold prices
are weak. Is it because we are no longer worried about our economy slipping
back into recession or is it because countries in trouble like Cyprus could
be selling their stores of gold? In either case, we can say that gold is
falling back at a time in which the economy continues to grow at a pace
which will not ignite inflation. That is the best type of growth possible.
Lower energy prices, lower interest rates and positive economic growth are
a strong combination. Of course, we all wish that the economic recovery
would become even stronger. However, there are benefits to a moderate
recovery -- especially if it does not come with the threat of a recession
around the corner or inflation down the road.
Home ownership and rental demand may both
get an uptick as a large number of immigrants are expected to enter the
United States and call it home by 2020, according to a new study sponsored
by the Mortgage Bankers Association’s Research Institute for Housing
America. The study makes projections to the year 2020 on the growth of U.S.
home owner households headed by immigrants. The number of foreign-born home
owners continues to grow bigger each decade, according to the report. For
example, the number of foreign-born home owners rose 800,000 from 1980 to
1990; by 2.1 million from 1990 to 2000; and then by 2.4 million from 2000
to 2010. For the 2010 to 2020 period, researchers project that number to
rise 2.8 million. The home ownership rate has particularly grown among the
Hispanic immigrant population. In 1990, Hispanic immigrants had a 15
percent home ownership rate, which grew to nearly 53 percent in 2010. By
2020, Hispanics’ home ownership rate is expected to rise above 61 percent,
according to researchers. The states with the greatest demand from the
foreign-born on home ownership are California and New York. The report was
prepared by Dowell Myers, professor of the Population Dynamics Research
Group at the University of Southern California School of Policy, Planning
and Development; and Senior Research Associate John Pitkin.“Immigrants are
an important and growing source of d emand that has bolstered housing
markets in recent decades,” Myers said. “Growth in housing demand in recent
decades has been more stable among foreign-born than native-born
households. This is because increases in native-born demand have been subject
to large swings in the size of cohorts reaching ages 25 to 34, the most
common age of entry to the housing market. Rising numbers of foreign-born
households are driven by the continued increases in homeownership rates
achieved as immigrants settle longer in the United States,” Pitkin said.' Source:
The Mortgage Bankers Association
The number of listings on the market increased 2.36 percent in March from
the previous month — possibly an indication that sellers are becoming more
willing to put their homes on the market as asking prices increase,
according to housing data from realtor.com. While the data shows a
month-to-month inventory increase, inventories are still down 15.22 percent
compared to last year. The median age of the inventory continues to drop
year-over-year by 12.35 percent, the amount of time homes are sitting on
the market has fallen by 20 days since February, according to realtor.com.
The median age of inventory of for-sale listings was 78 days in March. “The
next three months will be significant in determining the impact of the
recovering housing market,” says Steve Berkowitz, chief executive officer
of Move Inc. Median list prices have increased year-over-year in a greater
number of the 146 markets realtor.com tracks. Source: RIS Media
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