Forecasts for the holiday season and beyond
Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.
This year is almost over, and housing industry experts are all making their predictions for 2017. Although not everyone agrees on what next year will look like after President-elect Donald Trump is inaugurated and in the midst of a rapid rise in interest rates, most economists have a positive outlook for next year.
But what if this crazy election year is capped off by the craziest plot twist yet, and the electoral college does an end-run around Trump?
The electoral college will meet later today, and each elector will cast their vote for president and for vice president. Theoretically, the electoral college could choose not to elect Trump as the next president, in which case everything would change.
The electors are not obligated by federal law or the Constitution to vote for their state’s party. In fact, one elector vowed he would not follow his state’s vote. Although a large-scale rebellion in the electoral college seems unlikely, we may have to wait until Jan. 6 to be absolutely sure.
An article by Emmarie Huetteman for The New York Times explains what happens next:
On Friday, Jan. 6, at 1 p.m., members of the House and Senate will meet in the House chamber to count those votes. Vice President Joseph R. Biden Jr., as the departing president of the Senate, is expected to preside over the count, during which every state’s vote is opened and announced in alphabetical order.
Mr. Biden will then declare the winner based on who has the majority of votes — at least 270.
At that point, Mr. Biden will ask if there are any objections, and lawmakers can then challenge either individual electoral votes or state results as a whole. If an elector has chosen to vote against state results, that is the moment when lawmakers can petition to throw that vote out.
After all objections are resolved, the new president will be sworn in on Jan. 20, 2017.
Assuming Trump is sworn in without incident, one expert, Nadlan Valuation CEO Sam Heskel, explained why he’s confident 2017 will be a good year for the housing market in a LinkedIn article. Here are his top five reasons for being optimistic:
Interest rates are still low. Although they are rising, and experts think they could increase up to three more times next year, Heskel reminds readers that interest remain near historic lows.
More people are working. The employment report showed solid gains in December despite the narrowing supply of unemployed workers in the labor market.
Millennials will enter the housing market in a big way. Quelling rumors that Millennials don’t want to buy homes, a report from Ellie Mae in November shows that they’re not only buying homes, they’re even to the point they want to refinance.
Home prices are likely to moderate. Heskel writes that while home prices are rising and housing inventory is down, the market shows signs of improving.
Trump’s nomination of former neurosurgeon Ben Carson to secretary of Housing and Urban Development prompted many people to consider the intersection of housing and health care. On Sunday, the Los Angeles Times highlighted a program that uses county health funds to help get homeless people into market-rate housing, interviewing Housing for Health Director Marc Trotz.
Housing for Health takes a radically different approach to housing the homeless population, and has a goal of housing 10,000 homeless people in the next five years without new affordable housing construction. From the article:
Isn’t it better to construct dedicated housing than to rely on a tight housing market?
A new housing project can take up to five years for completion. Five years of work and you create 100 units of housing. That’s not going to cut it. They open, you identify 100 people and that’s great. And the buildings are great. But those opportunities are spread out over time. We need to be housing homeless people every day.
I personally think that for good or for bad we have a capitalist housing market in this country, and we won’t be able to get on top of the homeless situation solely through housing development, which is so great, but there is just not enough capacity there, realistically.
A new study shows a major shift in the housing market from previous years – cash sales are no longer king.
Cash sales rose drastically in 2010 as foreclosures became more common in the market, according to a new study conducted by the University of San Diego School of Business. Cash buyers rose to 20% of all transactions immediately preceding the recession, then increased to 40% in 2012, the study shows.
In 2006, only 700,000 properties faced foreclosure nationwide, however, that number increased to nearly 3 million in 2010. Now, the number of foreclosures is quickly approaching pre-recession levels.
In fact, November’s foreclosure filings tumbled both from last month and last year, and showed a greater monthly decrease than they’ve seen in several years, according to recent data from ATTOM Data Solutions.
As foreclosures decrease, cash sales decrease along with them. The one exception, according to the study, is in coastal cities, where buyers still demand a large discount for the risk of living near the coast.
On Monday, Federal Reserve Chair Janet Yellen will speak on the state of the job market at a commencement ceremony at the University of Baltimore, and possibly give more insights on the direction the Fed will take heading into 2017.
With the Christmas holiday falling on Sunday, this is the last Monday Morning Cup of Coffee for 2016. Have a very happy holiday and stay tuned in to HousingWire as we follow the news throughout this week and into the new year.