Weekly Economic Update
Economic News:
The Employment Picture Clouds a Bit
July jobs report shows demand for labor is slowing gradually.
The Federal Reserve and every market analyst have been waiting for the job market to cool down a bit so that one of the last bastions of inflation could fall. The June employment picture was a bit cloudier for the first time this year. Though the headline job data again was just about 200,000, which is nothing to sneeze at – the underlying numbers were a bit weaker. For example, the previous two months of gains were revised downward by just over 100,000.
Even one number which showed strength could be interpreted as a weakness. The average hours worked per week was higher, indicating that the demand continues. However, often employers expand overtime when they have the need and don’t want to hire additional personnel. Or perhaps they can’t find the workers. Wage inflation was still on the strong side, so this supports the latter theory.
These “cloudier” numbers made the July report released last Friday even more interesting. How did we do? The economy added 187,000 jobs in July, a decent number – but decidedly less than the average for the first half of the year. The previous two months of gains were revised down by approximately 50,000, making the overall numbers even lower. The headline unemployment rate moved down one tick to 3.5%. The all-important wage inflation numbers came in a bit high at 0.4% for the month and 4.4% annually. All-in-all, this was seen as a softer report, though wage growth will be concerning to the Fed. With no Fed meeting this month, there will be another jobs report before they meet in September.
Homeowners Assistance Fund Saving Distressed Owners
Homeowner Assistance Fund helped 300,000+ homeowners stay in their homes in Q1 2023.
The U.S. Department of the Treasury has released data on the Homeowner Assistance Fund (HAF) through March 31, 2023 (Q1 of 2023), which shows a substantial increase in assistance to homeowners at risk of losing their homes. As of March 31, HAF programs made approximately $3.7 billion in payments to more than 318,000 homeowners at risk of foreclosure. In Q1 of 2023 alone, HAF programs distributed $1.2 billion in assistance to households–a 50% increase over Q4 of 2022. Additionally, 14 states and two U.S. territories have expended more than 50% of their HAF program funds, excluding administrative expenses. The Treasury Department’s data also shows that HAF programs are reaching a higher proportion of economically vulnerable and traditionally underserved homeowners than previous federal mortgage assistance efforts. As of the close of Q1, 49% of HAF assistance was delivered to very low-income homeowners, defined as homeowners earning less than 50% of the area median income (AMI). Demographically, 35% of homeowners assisted self-identified as Black, 23% self-identified as Hispanic/Latino, and 59% self-identified as female. “The Homeowner Assistance Fund has helped keep hundreds of thousands of families in their homes,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “As state programs assess their remaining HAF funds, the Treasury Department will continue working with recipients to ensure these funds are swiftly delivered to homeowners most in need.” (Source: DSNews)
Climate Change Affecting Insurance Rates Big Time
Homeowner insurance premiums inflated by climate change and other key factors.
Factors including supply chain issues and climate change could mean a 9% rise in homeowners insurance rates in 2023, to an average of $1,784 per year, data analysts predict in a new study by the research team at Insurify. In 2022, home insurance rose approximately 7%, to $1,636 per annum, from the previous year, according to analysts who based estimates on Insurify’s collected property data. “U.S. auto and homeowner insurance premium rates lagged behind the inflation rate in 2020 and 2021, laying the groundwork for the premium increases which occurred last year and will continue into 2023,” Mark Friedlander, Director of Corporate Communications at Insurance Information Institute, said, referring to Insurify’s study Insuring the American Homeowner. Multiple factors contribute to this rise in premiums, inflation, climate, material costs, supply chain issues, and increased claims for fire and water damage, to name a few, experts say. Homeowner credit score, ZIP code, and the coverage level needed also affect the cost. Colleen Finn, Managing Director at Boston-based insurer Plymouth Rock, said that those inflationary pressures that are driving up Americans’ grocery bills are now driving up homeowner insurance rates. “It is costing more and taking longer to repair your home, increasing the average cost per claim and ultimately the cost of homeowners insurance for everyone,” Finn said. Experts add that severe weather and natural disasters, such as floods, earthquakes, hurricanes and wildfires are also inflating coverage costs. (Source: MReport)
Real Estate News:
Wedding Registry For Homes!
Study finds newlyweds prefer financial gifts they could have used towards homebuying costs.
According to research from Realtor.com and Censuswide, fine china and other traditional wedding gifts are out, and cash wedding gifts that are contributions toward homeownership are in. The research was conducted by Censuswide, with 2,291 respondents in the U.S. including 755 people who have created a wedding registry in the last 24 months. "It’s extremely difficult for first-time homebuyers right now," Realtor.com executive news editor Clare Trapasso tells FOX Business. "Any extra financial assistance they receive can mean the difference between becoming homeowners and remaining renters. First-time buyers also struggle with saving for a down payment. Inflation is high, rents have increased and student loan payments are resuming.
All of these factors can make it a challenge for first-time buyers to come up with a down payment plus closing costs. Additionally, first-time buyers are also at a disadvantage as they don’t have a home they can sell for a profit,” Trapasso said. The study found that newlyweds would rather gift-givers skip traditional presents in favor of financial gifts toward the purchase of a home. Although this is their preference, the data also revealed that many feel obligated to register for traditional gifts they don’t want. Newlyweds polled for the survey who have had a wedding registry in the last 24 months reveal this cash-focused gift trend is spot-on, as 85% say they would have preferred to have received money toward a down payment on a home, rather than a physical gift. And 80% said that if they were creating a gift registry today, they would include an option for people to give them money toward homebuying expenses, such as a down payment, a mortgage payment or closing costs, according to the survey. (Source: Fox Business)