In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the Case-Shiller home price index.
When the government reports that the inflation rate is such and such, price changes are based on hundreds of items. Everything from the price of spices and condiments to the prices of bedroom furniture and indoor plants are included to get a sense of how much a person is getting squeezed. However, that inflation figure is not a perfect measure for everyone as inflation will never be felt evenly. A change in the price of cigarettes has no bearing on non-smokers just as the price of public transportation fares has no impact on small town folks. But both cigarette and public transportation fares are included in the official consumer price index. The weight given to cigarette and public transportation is based on what an average person in America would be buying. As an example, college tuition is a significant item for those impacted. But many adults are not in college or have already graduated or never intend to attend. The official weight on college tuition and fees is only 1.5% of the consumer price index because 1.5% of all consumer spending in the U.S. is for college tuition in a given year.
First time home buyers accounted for 32 percent of total buyers in the latest Realtors® Confidence Index, slightly lower than the May figure of 34 percent. Normally first time buyers are in the neighborhood of 40 percent of total residential sales, according to NAR’s Profile of Home Buyers and Sellers[1]. The proportion of first-time homebuyers hit a peak of approximately 50 percent in 2009. The relatively low level of first time buyers in part reflects the difficulty of securing mortgage financing and/or the delay with distressed sales. Realtors® have also noted that investors offering all-cash sales to sellers have crowded out first-time buyers in some cases, particularly in the case of distressed properties. Unsuccessful first-time buyers typically continue their property search, sometimes making a number of bids before securing a property.
[1] In the 2011 survey, first-time homebuyers accounted for 37 percent of all buyers.
Which country will take home the most medals? That is an easy call because medal count and economic power go hand-in-hand. China is ascending while Russia is slipping. Despite sluggish economic growth, the United State maintains an indisputable top economic position. Therefore, the medal count winners will be, in order
- United States
- China
- Germany
Low Rates, But Who Can Get Them?
The average rate for a 30-year fixed rate mortgage hit another all-time low last week according to Freddie Mac. Last week’s average rate was 3.49 percent, breaking the 3.5 percent threshold and more than a full point below the 4.55 percent average from a year ago at this time. While the historic rate means great things for affordability, it also appears to be historically difficult to qualify for these record low rates.
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