August 2012 U.S. Economic Fundamentals

[Ally]

The rental generation sees no point in buying



The day Michael Anselmo signed a lease on his first apartment in New York City, he lost his job at Buck Consultants (XRX). He spent about 10 months struggling to pay rent with unemployment benefits. Two years later he`s hesitant to buy a bike, let alone try home ownership.




`Every decision that I have made since I lost my job has been colored by that insecurity I feel about the future,` says Anselmo, 28, who rents an apartment in Austin, Texas, and works as a consultant for UnitedHealth Group (UNH). `Buying a house is just further out on the timeline for me than it used to be.`





Read the full article here.

 

[Ally]

Why home price gains might even stick this time



Well, here`s some good news: On Tuesday the Case-Shiller Index showed that June home prices in 20 U.S. cities were higher than a year ago, the first year-over-year gain since 2010, when a first-time homebuyer tax credit boosted sales. `The better comparison is probably December 2006`the last time prices were in positive territory excluding tax-credit-induced distortions,` Deutsche Bank (DB) economists wrote in a note on Tuesday morning.




The question is: Will prices hold or even grow in the fall? Or will they continue the market`s recent trend of what CoreLogic (CLGX)calls a `Sisyphean slide,` by which price decreases in the second half of the year erase any gains. In normal times, home prices often climb in the first half of the year, as families gear up to move and get settled before the school year starts, and then flatten in the later months, when there is less activity. For the past several years, though, prices have fallen in the second half of the year, in part because fewer homeowners were selling and low-priced foreclosures made up a bigger share of the market.





Read the full article here.

 

[Ally]

U.S. housing prices to continue stabilizing in 2013





Higher equity and home values are providing some much-needed comfort to U.S. consumers, according to BMO Economics, following the release of the S&P Case-Shiller home price index for June which showed a more-than-expected rise of 0.9 per cent, seasonally adjusted.



"This represented the fifth straight monthly gain, and lands the index 0.5 per cent above year-earlier levels - the first positive reading in nearly two years," said Jennifer Lee, Senior Economist, BMO Capital Markets. "This report is very good news, and shows that prices are getting support from the pickup in demand for housing as well as fewer distressed homes on the market. It also represents a much-needed boost given the release of today's consumer confidence index for August, which shows a drop of 4.8 points."




A look at individual areas provided further encouragement, according to Ms. Lee. "Eighteen of the 20 metro areas saw home prices rise in June, the most since 2006. On a year-over-year-basis, 13 areas are now able to say that home prices have grown, including Phoenix, Miami and Minneapolis."





Read the full article here.

 

[Ally]

Growth in U.S. economy slowing, GDP data shows




The U.S. economy grew at a 1.7 percent annual rate in the April-June quarter, boosted by slightly stronger consumer spending and greater imports.




The Commerce Department said Wednesday that growth was slightly better than its initial estimate of 1.5 percent. But it was ahead of the two per cent annual pace of growth seen in the first quarter.




Economists expect a little better growth in the second half of the year after seeing some improvement in July data. But most believe the economy will keep growing at a subpar rate of around 2 per cent.





Read the full article here.

 

[Ally]

Canadians snapping up luxury homes




SCOTTSDALE ` When Matt Horton`s cellphone rings these days, it`s often from someone north of the border looking to buy one the luxury homes he lists with Realty One Group.




As if on cue, Horton receives a text message, then holds up his phone and chuckles. Another Canadian.




`What happens is word of mouth starts spreading up there,` he says. `Everybody and their mother has a place down here.`




A strong Canadian dollar and Arizona`s depressed housing market have created an opportunity for Canadians looking to capitalize not just on the exchange rate but a strong economy back home.





Read the full article here.