U.S. House Prices to Rise on Strong Demand and Shortage of Homes

Posted on February 28, 2018 in Uncategorized | Add Your Voice
U.S. House Prices to Rise on Strong Demand and Shortage of Homes
U.S. house prices will rise at double the pace of inflation and wages this year as the supply of single-family homes falls short of rising demand, making housing less affordable, according to property market analysts in a Reuters poll.

Demand for housing has been driven by a strengthening labor market and a robust pickup in economic growth — but a lack of supply is holding back activity.

Analysts were evenly split over what would happen to housing market turnover this year. Fourteen of 36 respondents who answered an extra question said turnover would increase, 13 said it would be the same and nine expected it to fall.

“Despite forecasts and fundamentals that portray a strong spring market for new home sales — the data shows a slump,” says Tim Rood, Chairman of The Collingwood Group.“Total US home sales unexpectedly fell 9.3% across the nation in December, led by a 10% drop in the Midwest and a 9.8% drop in the South.”

Since a crash in home values — almost 40 percent — over a decade ago that spawned the financial crisis and a punishing recession, U.S. house prices have more than recovered all of those losses.

Lately, price rises have been driven by a lack of affordable homes coming to market, particularly a shortage of single-family homes which account for almost 90 percent of sales. Over 80 percent of 36 analysts said that is likely to continue this year.

read more: Reuters

Fintechs’ Charter Hopes May Lie With New FDIC Board
Among federal bank regulators, the Office of the Comptroller of the Currency has been the most active on fintech chartering options. But another agency, the Federal Deposit Insurance Corp., may provide crucial guidance for fintechs in the shorter term.

The FDIC still has pending an application by Square for an industrial loan company, a limited-purpose bank typically chartered in Utah that receives deposit insurance. While it has been rare to see ILC entrants during years of controversy over the charter, observers hope incoming FDIC leadership will advance Square’s bid, potentially opening the door for others.

“I suspect how Square handles this [charter process] can provide a template for other firms,” said Brian Knight, director of the program on financial regulation and a senior research fellow at the Mercatus Center at George Mason University.

Some in the fintech industry hope the Trump administration’s regulatory appointees, who have generally been more supportive of the financial services industry, back some type of charter for the industry for the first time. The OCC has been developing a specialized fintech charter, but it is still unclear if the agency intends to move forward with accepting applications.

read more: American Banker

Powell Sees Gradual Rate Hikes Amid Strong U.S. Growth Outlook
Federal Reserve Chairman Jerome Powell said the central bank can continue gradually raising interest rates as the outlook for growth remains strong, and the recent bout of financial volatility shouldn’t weigh on the U.S. economy.

“Some of the headwinds the U.S. economy faced in previous years have turned into tailwinds,” Powell said in written testimony to the House Financial Services Committee on Tuesday in Washington. “Fiscal policy has become more stimulative and foreign demand for U.S. exports is on a firmer trajectory.’’

Powell takes charge of the rate-setting Federal Open Market Committee at a time when the world’s largest economy may be shifting gears to faster growth, somewhat higher inflation, and declining unemployment. Adding to the momentum are tax cuts and spending increases agreed to by Republican lawmakers and signed by President Donald Trump.

“In gauging the appropriate path for monetary policy over the next few years, the FOMC will continue to strike a balance between avoiding an overheated economy and bringing PCE price inflation to 2 percent on a sustained basis,’’ he said, in his first public appearance before Congress as Fed chief.

The recent correction in the stock market and rising rates on U.S. government debt shouldn’t hamper growth, he said.

read more: Bloomberg

Why Trump’s Plan Won’t Fix Crumbling Infrastructure
For the past decade or so, Americans have been inundated with propaganda about our crumbling infrastructure. According to this narrative, our roads and bridges are falling apart and the only solution is more federal spending.

Earlier this month, the White House released President Donald Trump’s long-awaited infrastructure program, which promises to spend $1.5 trillion — $200 billion from the federal government — on several new infrastructure programs on top of what governments already spend.

So how much of this money is dedicated to maintaining and restoring crumbling infrastructure? Zero; nada; not one red, white, and blue cent.

The White House says that, unlike some federal programs that are solely dedicated to new construction, the Trump plan allows state and local politicians to decide to spend their share of the funds on either new projects or maintenance. But the plan doesn’t guarantee that any of the money will be spent on maintenance.

read more: CNN

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Cecilia Panozzo
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