News: Real Estate, Risk, Economics. Jul. 17-18, 2014

Linking ≠ endorsement.

Table of Contents
(Click to sections below.)

1) Immobilized Americans cause economic weakness and slow housing sales – OC Housing News

2) Yellen vs. Bullard on Wages and Inflation: Who Is Right?

3) [Very, very highly recommended] Who Is the Unsung Hero of the $7 Billion Citigroup Settlement?

4) [Recommended] Bad debt cannot simply be "socialized" | Michael Pettis' CHINA FINANCIAL MARKETS

5) What's causing the monster Bayou Corne sinkhole? PBS' NOVA to take stab at answer | NOLA . com

6) Bikers and dogs suddenly rule real estate: Six surprising new trends – CultureMap Houston

7) BBC News – Another proponent for QE in the euro zone

8) [Recommended] Search Models, Mass Unemployment, and the Minimum Wage | Next New Deal

9) Robert J. Shiller believes that recent warnings that asset prices are rising dangerously fast may be correct. – Project Syndicate

10) Yellen Testimony – Tim Duy's Fed Watch

11) Five injured in Fort Worth apartment blaze | Crime and Safety | News from Fort Worth, Da…

12) Update: House fire in Arbor Heights blamed on spider-killing attempt

13) Southland housing market may finally be getting back to normal – LA Times

14) Watch bow-tied economist excitedly explain Metro Detroit's real estate market, macro economy | MLive . com

15) North Texas city rejects partial fracking ban

16) China's Economy Continues to Defy Gravity. That May Not Be a Good Thing | TIME

17) Juncker's balancing act – YouTube

18) Mortgage volume tanks; Jamie Dimon bashes the FHA

19) Terrebonne, Lafourche buy out flood prone homes | HoumaToday . com

20) California water regulators impose fines for water wasters

21) MANTOLOKING, NJ: Work begins on wall for 2 Sandy-devastated towns – Nation Wires – MiamiHerald . com

22) The Rise in Single Family Rental Investing | PEMCO Limited

23) Progress Report for Property Goals | Property Management Minutes

24) The global monetary system: Injured reserve | The Economist

25) [Recommended] A Marriage Made in Hell: Housing and Foreign Demand

26) Risk Aversion and the Natural Interest Rate

27) The Homeownership Rate for Millennials Has Hit Bottom – Real Time Economics – WSJ

28) FRB: Beige Book – July 16, 2014

29) [Entertaining logic] Noahpinion: Austrianism, wrong? Inconceivable!

30) 10 cities booming with job growth – The Week

31) Colorado AG Files "Massive" Suit Against Foreclosure Mills

32) Director says real estate sales prices should be public

33) Region's home prices quickly returning to pre-crisis highs | Business & Technology | The Seattle Times

34) 3 Mistakes New Real Estate Investors Make | Fox Business

35) Saginaw offers landlords alerts on police, fire calls at their properties | MLive . com

36) Mortgage Rates Fall, Remain Lower Than Year-Ago Levels – DailyFinance

37) US home construction drops 9.3 percent in June – Businessweek

38) Thousands of acres burn in Western wildfires

39) Apartment Fundamentals Soar to Long-Term Highs in Houston – Apartment Market Dynamics – YouTube

  1.    Immobilized Americans cause economic weakness and slow housing sales – OC Housing News

    America has long benefited from a mobile population capable of moving to take new jobs and delivering their skills and expertise where it's needed most. Over the last 25 years, Americans have been moving less, and the mobility rate continues to hit new lows. Some of this may be a sign of changing lifestyle choices, but with 9.7 million Americans trapped in their homes because they owe more on their mortgage than the house is worth, many Americans are immobilized by the banks, and that is a drain on our economic efficiency.

    Add your comment.


  2.    Yellen vs. Bullard on Wages and Inflation: Who Is Right?

    In short, the monetary history of the past twenty years suggests that wage growth at current or moderately higher levels is unlikely to cause a significant rise in consumer price inflation. Yet a continued trending up in wage growth would likely presage a rise in household leverage, which is a credible indicator of economic instability ahead. But at the current low leverage levels, far ahead.

    Add your comment.


  3.    [Very, very highly recommended] Who Is the Unsung Hero of the $7 Billion Citigroup Settlement?

    Bill Black:

    …you'll note that there are no criminal charges in this case against the individuals or against Citicorp. And as a result of all of this, all of the individuals who became wealthy through what the Department of Justice describes as an egregious fraud that was followed by a coverup–in other words, multiple felonies–have not been charged at this point, and, frankly, there's no indication that they're about to be charged as well. So the people that committed the frauds get to keep all of the bonuses that were created as a result of those frauds, and it's another disgraceful moment in the chapter of the Department of Justice.

    Add your comment.


  4.    [Recommended] Bad debt cannot simply be "socialized" | Michael Pettis' CHINA FINANCIAL MARKETS

    Michael Pettis:

    Some believe that the Chinese financial system, and perhaps the shadow banking system more specifically, took a number of wrong steps, compounded by the lack of discipline among local governments, and created a debt problem. By that logic, Beijing can take administrative steps to address credit creation and to bring debt under control. It is especially important, according to this view, to analyze the source of risky credit creation and to suppress it, which is perhaps why so much attention of late has been placed on the shadow banking system and on ways in which Beijing can "resolve" the existing stock of bad debt.

    My view is different. Burgeoning debt was not an unlucky accident. It is fundamental to the way the growth model works, and we have arrived at the stage, probably described most imaginatively by Hyman Minsky in his work on balance sheets, in which the system requires an acceleration in credit growth simply to maintain existing levels of economic activity.

    China's debt problems, in other words, cannot be resolved administratively, by fixing the shadow banking system, by imposing discipline on borrowers, or indeed by eliminating financial repression (much of which, by the way, has already been squeezed out of the system by lower nominal GDP growth). Without a massive transfer of wealth from the state sector to the household sector it will be impossible, I would argue, for GDP growth rates of anything above 3-4% — and perhaps even less — to occur without a further unsustainable increase in debt, whether that increase occurs inside or outside the formal banking system and whether or not discipline has been imposed on borrowers.

    The key point is that we cannot simply put the bad debt behind us once the economy is "reformed" and project growth as if nothing happened. Earlier losses are still unrecognized and hidden in the country's various balance sheets. These losses will either be explicitly recognized or they will be implicitly amortized. The only interesting question, as I see it, is which sector will effectively be assigned the losses. This is a political question above all, and its answer will tell us a great deal about how the newly-constituted, "reformed" China will grow over the next few decades.

    Add your comment.


  5.    What's causing the monster Bayou Corne sinkhole? PBS' NOVA to take stab at answer | NOLA.com

    Scientists believe a Texas Brine Co.-operated salt dome cavern had a breach after it had been mined of its salt too closely to the outer face of the large salt deposit surrounding the cavern. That breach in the salt dome cavern's supporting wall allowed surrounding rock to flow into the cavern, leading to the sinkhole at Bayou Corne.

    Add your comment.


  6.    Bikers and dogs suddenly rule real estate: Six surprising new trends – CultureMap Houston

    Real estate reflects the way people want to live, work, shop and play. If there's a new trend afoot, you'll see it being played out in the real estate market.

    At the National Association of Real Estate Editors 48th Annual conference in Houston scads of new trends came to light as dozens of experts spoke. Six of the most interesting were:…

    Add your comment.


  7.    BBC News – Another proponent for QE in the euro zone

    In the International Monetary Fund's annual review of the eurozone economy, it concluded that the European Central Bank (ECB) should undertake quantitative easing (QE) if inflation remains too low.

    The ECB says it is discussing all unconventional monetary policy options. The OECD had already urged the ECB to consider institutional changes to conduct QE. Now, the IMF has given them more to chew over.

    No wonder some are expecting a new era of QE this year. This is while the Fed considers raising interest rates as its QE programme is set to end. No doubt, it's going to be a tricky time for the global economy.

    Those recommendations run contrary to what the Bank for International Settlements (BIS) has suggested. We think the BIS is wrong: too Austrian School.

    Add your comment.


  8.    [Recommended] Search Models, Mass Unemployment, and the Minimum Wage | Next New Deal

    Mike Konczal:

    Minimum Wage

    There's some debate on this, but it looks like economists are softening on their opposition to raising the minimum wage, particularly if the question is phrased as whether or not a slightly higher minimum wage would pass a cost-benefit test. Search theory might be a reason why. If you are schooled in thinking of the labor markets in a search model, the idea that the minimum wage might not have an adverse employment effect makes more sense. A higher minimum wage means that low-wage workers will search harder for low-end jobs. They'll be more likely to accept those jobs, and less likely to turn them over as well. These all would help raise the equlibrium employment level.

    Even further, if you think that each job has a bit of a search friction surrounding it, then the idea that the employer has a little bit of monopoly power over the job makes sense. Employers might not raise wages to a market clearing rate because that, in turn, would mean having to raise the wages for all their workers. A minimum wage pushes against that. Understanding the labor markets through this lens ideas helps explain why any disemployment effects are minimial compared to the economics 101 story.

    As I read it, much of this theory took hold in labor economics to help explain the data people were seeing. Why were there so many vacancies in fast food? Why didn't minimum wage hikes obviously cause unemployment in the data? This should tell us something – theory, when built up out of observations and data, can tell us something useful. But the same theory moved over to the business cycle, where it ignores conflicting data and is propelled downward by partisan and ideological forces, can be an utter disaster.

    Add your comment.


  9.    Robert J. Shiller believes that recent warnings that asset prices are rising dangerously fast may be correct. – Project Syndicate

    Robert J. Shiller:

    We simply do not have much well-documented history of big financial crises to examine, leaving econometricians vulnerable to serious error, despite studying time series that are typically no more than a few decades long.

    Until the recent crisis, economists were talking up the "great moderation": economic fluctuations were supposedly becoming milder, and many concluded that economic stabilization policy had reached new heights of effectiveness.

    Add your comment.


  10.    Yellen Testimony – Tim Duy's Fed Watch

    Janet Yellen via Tim Duy:

    If the labor market continues to improve more quickly than anticipated by the Committee, resulting in faster convergence toward our dual objectives, then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned. Conversely, if economic performance is disappointing, then the future path of interest rates likely would be more accommodative than currently anticipated.

    The system grossly undershot the fiscal stimulus. Now they want us to worry that they will undershoot raising interest rates, that is they will wait too long to raise them to counter inflationary pressures supposedly caused by rising levels of employment. However, they don't have a handle on the issue, as the Phillips Curve is way too variable.

    Overshooting and thereby slowing the economy is more likely in our opinion what with the level of and type of discussion that's been ongoing between the doves and hawks at the Fed (if Yellen is able to be swayed by mere Austrian ideological talk; we hope not).

    Add your comment.


  11.    Five injured in Fort Worth apartment blaze | Crime and Safety | News from Fort Worth, Da…

    FORT WORTH — Five residents of an apartment complex were injured Wednesday morning in an apartment fire in east Fort Worth that destroyed one building and damaged two others, fire officials said.

    Add your comment.


  12.    Update: House fire in Arbor Heights blamed on spider-killing attempt

    Obviously a very bad idea:

    From SFD: "Cause of West Seattle Arbor Heights fire is man using spray paint can & lighter to try and kill spider in the wall. Damage estimate $60k."

    This is the second house fire we've reported within a week where someone was trying to kill a spider via fire.

    Add your comment.


  13.    Southland housing market may finally be getting back to normal – LA Times

    The housing recovery looks to be losing steam. But that may not be a bad thing.

    In the latest sign of a market that's plateauing well below its past highs, home prices in Southern California grew at their slowest pace in two years in June, capping a spring selling season that never quite took off.

    Add your comment.


  14.    Watch bow-tied economist excitedly explain Metro Detroit's real estate market, macro economy | MLive.com

    DETROIT, MI — Energetic economist Elliot Eisenberg says that, for the moment, things are (mostly) looking up for the Metro Detroit real estate market, and even for the economy as a whole.

    Add your comment.


  15.    North Texas city rejects partial fracking ban

    Follow-up:

    DENTON, Texas (AP) — The council governing a North Texas city that sits atop a large natural gas reserve rejected a bid early Wednesday that would have made it the first city in the state to ban further permitting of hydraulic fracturing in the community.

    Denton City Council members voted down the petition 5-2 after eight hours of public testimony, sending the proposal to a public ballot in November.

    Add your comment.


  16.    China's Economy Continues to Defy Gravity. That May Not Be a Good Thing | TIME

    …how is China defying gravity once again? There is always the perennial suspicion that the numbers are inflated. Capital Economics looks at statistics that aren't as easily manipulated as GDP, such as freight shipments and electricity output, to gauge the economy's performance, and figures GDP has probably been expanding more like 6% in recent quarters. But economists are crediting the latest growth rate to government stimulus, carefully targeted at infrastructure and public housing, both investments the economy still needs.

    This is a smart move [?]. The Chinese government has ample ability to keep growth humming while it attempts to implement more substantial reforms. However, the reliance on stimulus also raises doubts about what might be ahead. Some economists see growth "bottoming out" and a revival continuing through the rest of the year. Others believe continued headwinds, especially the struggles of the property sector, are too strong for the government to counter — without even greater largesse. That might be on its way. New loans made in June were the highest in five years, according to research from Barclays, which suggests that the government is loosening up credit once again.

    That begs the most important question facing China's economy right now: Will Beijing sacrifice reform for growth?

    …less optimistic, view is that the problems rotting away at the Chinese economy are so complex and entrenched that policymakers are prioritizing continuing growth over tough reforms. In that scenario, China's broken-down growth model will be kept alive with debt and government spending, while the fundamental change necessary to take China to the next level stalls.

    We think there are way too many people earning low wages while there are way too many housing units sitting vacant that will remain so for a very long time if China doesn't get its act together.

    They made very big mistakes that have been a waste and very environmentally costly.

    We don't see them doing enough soon enough to avoid a serious stumble that they won't be able to mask. In fact, we think they've already tripped up and are scrambling to save face and avoid domestic rebellion.

    The facade is become thinner and thinner. It will be utterly transparent soon at this rate.

    Add your comment.


  17.    Juncker's balancing act – YouTube

    Jean-Claude Juncker has won a vote of approval as president of the European Commission. Quentin Peel considers how the former president of Luxembourg achieved a record share of the vote and how mediating skills will be essential to his success.

    Add your comment.


  18.    Mortgage volume tanks; Jamie Dimon bashes the FHA

    "The housing sector has shown little recent progress," noted Federal Reserve Chair Janet Yellen in a semi-annual report to Congress Tuesday. "While this sector has recovered notably from its earlier trough, housing activity leveled off in the wake of last year's increase in mortgage rates, and readings this year have, overall, continued to be disappointing."

    Add your comment.


  19.    Terrebonne, Lafourche buy out flood prone homes | HoumaToday.com

    Terrebonne government has a $4 million grant it's using to buy storm-damaged or flood-prone homes throughout the parish. So far the parish has purchased nine homes.

    The purchased homes are in areas too low for pump stations to reliably keep dry. Homes below what Gordon calls "tail water elevation" are more susceptible to flooding.

    It becomes the next buyer's responsibility to build up the lot or elevate any structure built there.

    Add your comment.


  20.    California water regulators impose fines for water wasters

    California water regulators have voted to approve fines up to $500 a day for residents who waste water on lawns, landscaping and car washing.

    The fines will apply only to wasteful outdoor watering, including hosing down hard surfaces such as sidewalks and driveways.

    The report says overall consumption jumped 1 percent, even as Brown has called for a 20 percent cutback. It corrected survey results released just a month ago that said use statewide had declined by 5 percent.

    The proposal endorsed by the state board prohibit the watering of landscaping to the point that runoff spills onto sidewalks or streets. Hosing down sidewalks, driveways and other hard surfaces would be banned in most cases, along with washing vehicles without a shut-off nozzle.

    Add your comment.


  21.    MANTOLOKING, N.J.: Work begins on wall for 2 Sandy-devastated towns – Nation Wires – MiamiHerald.com

    Two wealthy New Jersey shore towns that were among the hardest hit by Superstorm Sandy nearly two years ago began building a 4-mile-long steel wall Thursday, an expensive effort that the state says is needed to protect the communities but that some residents and environmentalists oppose.

    The 45-foot-long steel sheets will be driven 30 feet into the ground and eventually covered by sand, which will form a dune system 22 feet above sea level. In December or January, the U.S. Army Corps of Engineers will begin a beach replenishment project to widen the beach in front of the wall to 300 feet.

    Environmentalists say the wall will worsen erosion if the beach in front of it is not constantly replenished, citing decades of studies worldwide that show waves smashing against hard structures like metal or rock walls or bulkheads will scour the sand in front of them, worsening erosion there.

    Add your comment.


  22.    The Rise in Single Family Rental Investing | PEMCO Limited

    The investors that acquired the portfolios of thousands of homes for rent are now shifting their acquisition strategies away from bulk portfolio buying to becoming more disciplined and market oriented. The Blackstone Group, the largest of the investor companies, recently announced that it was concentrating on buying future single family homes in a few markets: Atlanta, Miami, Orlando, Seattle and Tampa. Blackstone also said they purchased 70 percent less homes than its peak in 2013.

    Just as Blackstone did, Silver Bay has decided to focus on purchasing in select markets, including Texas and Atlanta. Blackstone, known for being innovative, completed the first and so far only securitization backed exclusively by loans secured by single family rental units. The other SFR aggregators are taking notice.

    Add your comment.


  23.    Progress Report for Property Goals | Property Management Minutes

    Lori Hammond:

    Economic occupancy is calculated by dividing the rent income received by the number of occupied apartment homes. Focusing on this value shows the effect of concessions on revenue.

    A property with 200 total apartment homes, an average market rent of $600 has a monthly gross rent potential of $120,000. If the property is fully occupied, all 200 apartment homes have signed leases; not preleases, or assigned apartments, but paying rent, keys in hand occupied apartments, with $113,893 for rental income, it reflects a 94.9% economic occupancy. This same result in revenue actually reflects an effective or economic rent of $569.

    Add your comment.


  24.    The global monetary system: Injured reserve | The Economist

    America has the ability to use its currency as an instrument of foreign policy. But the dollar's status as a reserve currency means that the dollar has a value over and above its utility in buying American goods. The dollar is therefore more expensive than it might otherwise be, which is a source of constant irritation to American exporters. It also constrains American policy. The world cares a great deal when its regulators punish violations of American law or when its central bank tries to stimulate a sagging American economy. American leaders are therefore forced either to limit such actions or to accept a cost to their soft power when they go ahead despite foreign complaints.

    Were the euro to play more of a global role, as was once thought likely and as the French occasionally desire, these trade-offs would become more acute for European policy makers. The same would be true in Beijing, as well, if China were to succeed in establishing the renminbi as a reserve currency.

    Add your comment.


  25.    [Recommended] A Marriage Made in Hell: Housing and Foreign Demand

    …increased foreign demand for real estate is almost always bad news for the locals. The phenomenon has not just taken place in Spain, housing bubbles have appeared in the Netherlands, Greece, Cyprus and even London as it appears nowadays. So next time you hear about rising foreign demand for real estate in your country be wary, very wary.

    Add your comment.


  26.    Risk Aversion and the Natural Interest Rate

    Bianca De Paoli and Pawel Zabczyk:

    …accounting for a cyclical change in precautionary savings points to a more accommodative stance during downturns by lowering the NIR. As negative shocks to demand are magnified by an increase in precautionary behavior, a larger policy rate response is required to curb deflationary pressures. Even negative supply shocks—which are generally inflationary—may be less so if they motivate people to save more for precautionary reasons. Accordingly, the policy rate that is consistent with stable prices ends up being lower when one takes into account that risk aversion falls during downturns.

    Add your comment.


  27.    The Homeownership Rate for Millennials Has Hit Bottom – Real Time Economics – WSJ

    More millennials became homeowners last year, a sign that the homeownership rate among America's young adults may have hit bottom, according to a new analysis of Census data published Wednesday.

    Add your comment.


  28.    FRB: Beige Book – July 16, 2014

    The Federal Reserve Board of Governors in Washington DC.:

    All twelve Federal Reserve Districts indicated that economic activity continued to expand since the previous report. The pace of economic growth was characterized as moderate in New York, Chicago, Minneapolis, Dallas, and San Francisco, while the remaining Districts reported modest expansion. Compared to the previous reporting period, Boston and Richmond noted a slightly slower pace of growth. Most Districts were optimistic about the outlook for growth.

    Overall consumer spending increased in every District. Retail sales grew modestly in most Districts, with increases that were generally similar to the previous reporting period. Vehicle sales remained stronger than non-auto retail sales, with Philadelphia, Richmond, Atlanta, and San Francisco indicating robust to very strong auto sales. Tourism activity expanded in all reporting Districts, with growth ranging from slight in Philadelphia to very strong in Boston. Hotel contacts described robust activity in the Boston, New York, Atlanta, and Minneapolis Districts, while Philadelphia and Richmond noted activity levels that were in line with seasonal norms.

    Activity in the nonfinancial services sector continued to grow across all Districts at a modest to moderate pace. Many Districts reported positive growth for professional and business services, including healthcare consulting, advertising, engineering, accounting, and technology. Overall, transportation activity rose at a moderate pace since the previous survey period. Broad-based demand for trucking and rail services across the Districts increased, and the Richmond District reported strong growth in port container traffic, with increases in both imports and exports. Manufacturing activity expanded in all twelve Districts. Contacts in the metal and auto industries generally reported positive growth, while manufacturers in the Philadelphia, Cleveland, Richmond, and Chicago Districts re ported increased demand for their products from the energy sector.

    Reports on real estate activity varied across the Districts. Many Districts reported low inventories and increasing home prices, but demand was mixed. Boston, New York, and St. Louis reported home sales were below year-ago levels, while Chicago noted a decrease in home sales since the last survey period. Home sales in other Districts remained steady or increased. Multi-family sales and leasing activity were robust in the New York and Dallas Districts. Residential construction rose for single-family homes in the Cleveland, Chicago, Kansas City, and San Francisco Districts, while New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco reported increases for multifamily construction. Commercial construction activity generally strengthened across the Districts, due to higher demand and low vacancy rates.

    Loan volumes rose across the nation, with slight to moderate increases reported in most Districts. Credit quality remained stable or improved slightly in most Districts, while San Francisco noted a slight decline. Credit standards were generally unchanged, although Richmond noted an easing of cost terms for well-qualified commercial and industrial borrowers, and Philadelphia and Chicago mentioned that competitive pressures were leading some financial institutions to take on higher credit risks.

    Among Districts reporting on agriculture, heavy rains improved soil moisture levels in the Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts, while drought conditions persisted in San Francisco. Most fall crops were reported in good or better condition, and expectations of higher production lowered crop prices. Profitability improved for livestock operators in the Atlanta, Minneapolis, and Kansas City Districts due to high cattle and hog prices. Oil production expanded in the Minneapolis, Kansas City, and Dallas Districts, while natural gas and coal production remained relatively steady in reporting Distric ts.

    Labor market conditions improved, as all twelve Districts reported slight to moderate employment growth. Several Districts continued to report some difficulty finding workers for skilled positions. Aside from higher wages to attract talent for these skilled positions, wage pressures remained modest in most Districts. Price pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods. Several Districts noted higher prices for meat, dairy products, construction materials, and some metals (namely steel, copper, and nickel).

    Real Estate and Construction
    Residential real estate activity continued to vary by Federal Reserve District, reflecting generally low inventories and mixed levels of demand. Specifically, Boston, New York, Atlanta, Kansas City, and Dallas noted that residential home sales were constrained by low or dwindling inventories. Nevertheless, despite decreasing inventories, residential home sales in the Atlanta and Kansas City Districts rose at a slight to modest pace. Philadelphia, Cleveland, and Richmond also noted a slight to modest increase in sales since the previous survey period, while San Francisco reported that home sales in the recent reporting period were below year-ago levels. Boston, New York, Chicago, and St. Louis indicated that residential sales activity softened, with Chicago attributing some of this decline to an increase in prices. Home prices continued to rise across most of the Districts, especially within urban areas, but contacts in the San Francisco District noted a slightly slower pace of home price appreciation. New York and Dallas reported robust activity in multifamily sales and leasing.

    Residential construction activity generally increased across the Districts, with only St. Louis and Minneapolis reporting a decline in overall activity. Chicago and San Francisco reported increased construction of high-end urban single-family homes, and Cleveland and Kansas City continu ed to see growth in low- to medium-priced single-family construction. Cleveland and San Francisco reported that a shortage of vacant lots was holding back further growth in both single-family and multifamily construction; however, growth remained positive. New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco noted that multifamily construction activity increased since the previous survey period. Contacts in the Cleveland District reported that they were seeing greater willingness to finance multifamily projects.

    Commercial construction activity strengthened across most Districts. Cleveland and Atlanta reported increased commercial construction activity compared to a year ago, and Philadelphia, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco noted gains since the previous survey period. Boston and Richmond saw mixed commercial construction activity across their Districts since the previous report. Dallas indicated strong overall commercial real estate construction activity, and commercial real estate construction increased in the Minneapolis District compared with the previous report. Boston, New York, Richmond, Chicago, Kansas City, and Dallas reported tight commercial vacancy rates. Industrial real estate construction and leasing activity was strong in the Philadelphia and Chicago Districts.

    Employment, Wages, and Prices
    Labor market conditions continued to improve since the previous report, with all Districts reporting slight to moderate employment growth. Employers in the Philadelphia District remained cautious, and reported hiring for replacement and some incremental growth. Philadelphia and Atlanta reported more hiring for permanent positions since the last reporting period. Employers in the Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, and Dallas Districts reported difficulty finding workers for some skilled positions. In particular, a shortage of truck drivers was noted in the Cleveland, Richmond, Atlanta and Kansas City Distri cts, and skilled construction and craft workers were reportedly in short supply in the Cleveland, Richmond, Atlanta, Chicago, Kansas City and Dallas Districts. Cleveland and Dallas also noted that labor markets were tight in energy-producing areas.

    Most Districts noted that wage pressures remained modest outside of some skilled positions. New York, Philadelphia, Cleveland, Richmond, and Atlanta reported stable to slightly increasing wage pressures; in addition, Chicago indicated that wage pressures increased (though primarily for skilled workers). St. Louis, Minneapolis, and Kansas City reported modest wage pressures. Wage pressures in the Dallas and San Francisco Districts were moderately higher than in other parts of the country. Dallas noted that the strongest wage pressures within its District were in the energy and construction sectors, but reported modest upward pressure in other industries as well. San Francisco mentioned some upward wage pressure from rising minimum wages, and some contacts in the San Francisco District noted an increasing need to offer higher starting salaries to attract talent from competitors.

    Price pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods. New York and Chicago reported upward pressure on costs; Richmond and Kansas City reported that prices of raw materials and finished goods rose at a slightly slower pace. Several Districts noted higher prices for meat, dairy products, construction materials, fuel, and some metals (namely steel, copper, and nickel). Contacts in the Boston, Cleveland, Atlanta, Kansas City, Dallas, and San Francisco Districts reported success in passing on higher input costs to customers in some instances.

    Add your comment.


  29.    [Entertaining logic] Noahpinion: Austrianism, wrong? Inconceivable!

    We have to go with Noah on this one. Noah Smith:

    let's examine Robert's critique. Much of my original article discussed the failed Austrian prediction that QE would cause inflation (i.e., a rise in the general level of consumer prices). Robert reiterates four standard Austrian defenses:….

    Add your comment.


  30.    10 cities booming with job growth – The Week

    "The overall job growth in these markets is not primarily a product of national economic trends, but rather distinct factors in the local economy such as energy resources in Houston, technology hubs in Silicon Valley and Austin, or the motion picture industry in Los Angeles."

    Add your comment.


  31.    Colorado AG Files "Massive" Suit Against Foreclosure Mills

    It's not hard to notice the contrast between the posture of a Republican state attorney general in Colorado, John Suthers, who opened up an investigation when the Denver Post exposed pervasive overbilling by foreclosure mills, versus the conduct of a Federal task force dedicated to pursuing foreclosure fraud.

    The Colorado case filed on Tuesday (embedded below) gives a detailed account of how the two largest foreclosure law firms in the state colluded to set prices on various services well above permissible levels, garnering as much as $97 million in ill-gotten gains since 2006. By contrast, as we discussed at length yesterday, the latest Department of Justice foreclosure settlement, this with Citigroup for $4.5 billion in cash, managed the difficult task of taking a full nine pages to say almost nothing about what the giant bank actually did.

    Add your comment.


  32.    Director says real estate sales prices should be public

    The state Revenue Department will ask the 2015 Legislature to change the law to allow the sales prices of real estate to be publicly disclosed, Director Mike Kadas told a legislative committee on Wednesday.

    Past legislative sessions have rejected the idea, but Kadas pitched the idea that public disclosure of sales prices as a valuable tool for property owners to use when challenging the department's valuations of their property.

    The Montana Association of Realtors has led the opposition in past sessions to making real estate sales prices public, citing the privacy of those buying and selling property.

    "It's not just the right to know, but the right to know the basis of your taxation," Peura said."It's not just the right to know for prurient reasons. It's why you're being taxed at what you're being taxed on."

    Add your comment.


  33.    Region's home prices quickly returning to pre-crisis highs | Business & Technology | The Seattle Times

    …the thousands of new employees joining big tech firms such as Amazon.com and Facebook in Seattle and Google in Kirkland are finding limited choices for housing. Vacancy rates in urban apartments are low. The average rent in King and Snohomish counties was $1,284 in the second quarter, up almost 8 percent annually.

    More renters are searching for homes to buy, but the inventory of homes for sale is still relatively tight, pushing prices higher.

    Add your comment.


  34.    3 Mistakes New Real Estate Investors Make | Fox Business

    "Most people bank on the fact that right off the bat the property is cash flow positive but they aren't factoring in all the expenses," he says, noting that many investors also overestimate the appreciation of the home as well.

    Add your comment.


  35.    Saginaw offers landlords alerts on police, fire calls at their properties | MLive.com

    "It's funny, but we would joke that we would have to wait for neighbors to call to find out our building had burned down."

    The city of Saginaw hopes to vastly improve that communication through a new automated system that will send landlords weekly updates of any police or fire calls at their properties.

    Add your comment.


  36.    Mortgage Rates Fall, Remain Lower Than Year-Ago Levels – DailyFinance

    Mortgage rates are below the levels of a year ago, having fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term rates low.

    They are still irrationally high.

    Add your comment.


  37.    US home construction drops 9.3 percent in June – Businessweek

    U.S. home construction fell in June to the slowest pace in nine months, a setback to hopes that housing is regaining momentum and will boost economic growth this year.

    Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes, the Commerce Department said Thursday. That was the slowest pace since last September and followed a 7.3 percent drop in May, a decline even worse than initially reported.

    Applications for building permits, considered a good indicator of future activity, were also down in June, dropping 4.2 percent to a rate of 963,000 after a 5.1 percent decline in May.

    Jennifer Lee, senior economist at BMO, said it was too soon to conclude that the housing recovery has stalled. "After all, job growth continues, mortgage rates are near their lows for 2014 and homebuilder confidence has been increasing," she said in a research note.

    All of the June weakness was confined to the South….

    Add your comment.


  38.    Thousands of acres burn in Western wildfires

    A rash of wildfires spreading across parched Western states prompted two governors to declare states of emergency and forced evacuations from hundreds of homes.

    Here's an update on how the tinderbox conditions caused by drought, high temperatures and wind are sending wide stretches of mostly rural Washington, Oregon and Nevada up in flames.

    Add your comment.


  39.    Apartment Fundamentals Soar to Long-Term Highs in Houston – Apartment Market Dynamics – YouTube

    With tremendous job growth and surprisingly moderate apartment construction (by Texas standards, at least), Houston's apartment market continues to put up impressive numbers. In fact, Houston notched long-term highs in both occupancy and in rent growth during 2014's 2nd quarter.

    Add your comment.


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe