Download Fed again delays interest rate hike - California Association of Realtors

Fed again delays interest rate hike
Source: HousingWire
The Federal Reserve prolonged the wait for the first interest rate increase in nine years. On Wednesday,
the Fed announced that its benchmark rate would remain unchanged at 0-0.25 percent. As a rationale for
the decision, a statement from the Fed commented that the country’s economy still has not met the targets
laid out by the Federal Open Markets Committee.
Making sense of the story

Even after chair Janet Yellen said in June that 2015 would be an appropriate timing for a hike,
and inflation was crawling towards the Fed's 2 percent goal, the labor market's progress was
mixed.

The Fed’s hesitancy to raise rates shouldn’t be a surprise, given its repeated reluctance to raise
rates in previous meetings. The Fed has not raised interest rates since June 2006.

The Fed acknowledged that the pace of job gains slowed, following the past two weaker-thanexpected employment reports.

Inflation is anticipated to remain near its recent low level in the near term but the Committee
expects inflation to rise gradually toward 2 percent over the medium term as the labor market
improves further.

The Fed will continue to monitor labor market conditions, indicators of inflation pressures and
inflation expectations, and readings on financial and international developments.

The report states, “The pace of job gains slowed and the unemployment rate held steady.
Nonetheless, labor market indicators, on balance, show that underutilization of labor resources
has diminished since early this year.”

The Fed continued, “Household spending and business fixed investment have been increasing at
solid rates in recent months, and the housing sector has improved further; however, net exports
have been soft.”
Read the full story
http://www.housingwire.com/articles/35477-fed-again-delays-interest-rate-hike
In other news …
Millennials Need a Clear Path to Homeownership, HUD Secretary Says
Source: realtor.com
U.S. Secretary of Housing and Urban Development Julián Castro was the featured guest during a special
town hall meeting with Jonathan Smoke, chief economist of realtor.com®. Castro and Smoke discussed
how the millennial generation will gain access to homeownership, with Castro touting Obama
administration policies that he claims will help generations of future home buyers. Castro stated, “If it
was true that a few years ago it was too easy to get a home loan, the story of the last couple of years has
been that for middle-class folks, whether they are first-time home buyer or not, it has been too difficult.”
Smoke praised HUD for reducing mortgage insurance premiums.
Read the full story
http://www.realtor.com/news/trends/milennials-need-clear-path-to-homeownership-hud-secretary-juliancastro/
When Tech Employees Move In, Housing Prices Go Up
Source: The Atlantic
Housing prices examined in neighborhoods like San Francisco and San Jose show that a high proportion
of Apple employees drive up home prices nearby. Using Census data and housing statistics from Zillow,
the report concluded that the prices in neighborhoods where workers at Apple’s Cupertino headquarters
tend to live rise much faster—especially when the company’s doing well. It has been argued that such
change in prices is emblematic of other tech companies’ workers’ presence in the city. It seems clear that
rapid economic growth often brings with it spikes in housing prices and cost of living.
Read the full story
http://www.theatlantic.com/business/archive/2015/10/sf-real-estate-apple/412372/
The Homeownership Rate Is Near a 30-Year Low. Could It Be Hitting
Bottom?
Source: Wall St. Journal
The homeownership rate (not seasonally adjusted) increased slightly to 63.7 percent from 63.4 percent in
the last quarter, which is still near its lowest point in 30 years. The seasonally adjusted homeownership
rate remained at 63.5 percent in the third quarter, according to estimates published by the Commerce
Department. However, economists said the good news is that the homeownership rate may not go much
lower. The number of homeowner households increased by 123,000 in the third quarter from a year
earlier, while the number of renter households increased by 1.3 million.
Read the full story
http://blogs.wsj.com/economics/2015/10/27/the-homeownership-rate-is-near-a-30-year-low-could-it-behitting-bottom/
Delivering on the Promise of Connected Homes
Source: McKinsey
In the span of a few short years, connected devices have entered the homes of millions of Americans, and
are now poised for a new wave of growth. In a new survey from McKinsey & Company, approximately
2,000 U.S. households were asked for their views on the connected home, revealing distinct customer
segments and key issues that need to be tackled in order to unlock growth. Households with +$100k
income are 2.5 times more likely to be connected, and 3 times more likely to have multiple devices.
Thermostats/energy and safety monitoring devices have high interest among consumers but their value
proposition is not fully understood.
Read the full story
http://www.mckinsey.com/spContent/connected_homes/index.html?cid=other-eml-alt-mip-mck-oth-1510
Housing Will Still Expand Despite Economic Weakness
Source: Forbes
There is plenty of pent-up housing demand to keep the positive momentum rolling in the housing market,
according to Lawrence Yun, the chief economist of the National Association of REALTORS®. He states,
“Home sales, new construction, and home prices have all been rising and will continue to rise. In fact, it
will be housing market gains that will enable the broad U.S. economy to avoid a recession.” Yun also
points to the rising U.S. population and the fact that 2 to 3 million additional residents live in America
every year, and their need for shelter is promising for the continued momentum of the housing market.
Read the full story
http://www.forbes.com/sites/lawrenceyun/2015/10/26/housing-will-still-expand-despite-economicuncertainty/
Talking Points …

The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.7 percent in the 12
months ended in August, slightly greater than a 4.6 percent increase in July.

The 20-city index jumped 5.1 percent year-over-year through August, after July’s 4.9 percent
increase. Economists surveyed by The Wall Street Journal expected a 5.1 percent increase in the
20-city index.

West coast cities remained the strongest markets over the past year, with San Francisco and
Denver gaining 10.7 percent through August, and Portland, Ore., jumping 9.4 percent.