2018 Year End Economic Update

New York Stock Exchange
New York Stock Exchange
New York Stock Exchange

2.6 million new jobs were added in 2018 as unemployment dropped to a 40-year low – The Bureau of Labor Statistics reported that U.S. employers added 312,000 new
jobs in December. This shocked analysts that had forecasted 178,000 new jobs. 
There were 2.6 million jobs added in 2018, up from 2.2 million new jobs in 2017. The unemployment rate rose to 3.9% from 3.7% in November, a 40-year low, as 419,000 new workers entered the workforce. Optimism about finding an acceptable job and
higher wages were credited with expanding the workforce. Wages rose 3.2% from
one year earlier, matching October’s year over wage gains which marked the largest
year over year wage gain since April 2009. 

Stock markets ended the year lower in 2018 – After hitting all-time highs in
September, which marked the longest bull market in history, stocks took a downturn in the last quarter of the year. December marked the worst December drop since the Great Depression as fears of a trade war, political uncertainty, slowing economic activity overseas, and higher interest rates made investors more cautious. The Dow Jones Industrial Average ended 2018 at 23,327.46, down from 24,719.22 at the close of 2017.The S&P 500 closed the year at 2,506.85, down from 2,673.51 at the end of 2017. The NASDAQ closed at 6,635.28, down from 6,903.39 on December 31, 2017. 

U.S. Treasury Bond Yields higher in 2018 – The 10-year U.S. treasury bond closed the year at a 2.69% yield, up from 2.40% on December 31, 2017. The 30-year treasury yield ended the year at 3.02%, up from 2.74% on December 31, 2017.Mortgage Rates higher in 2018 – The December 28, 2017 Freddie Mac Primary Mortgage Survey  reported that the 30 year fixed mortgage rate average was 4.55%, up from 3.99% on December 29, 2017. The 30-year fixed rate was over 5% in October before
declining in November and December. The 15-year fixed was 4.01%, up from 3.44% . last December. The 5-year ARM was 4.00%, up from 3.55% at the close of 2017. Fortunately, rates dropped in the final quarter. The 30-year hit 5% in September. 

Year over year price gains moderated in 2018 after 7 years of price gains. For the first 7 months of the year we saw the same month year over year price increases of
6-8%, but by years end those prices were just 1.5% above the same month one year earlier – The California Association of Realtors reported that existing home sales 
totaled 372,260 in December on a seasonally adjusted annualized basis. That was 
down 11.6% from last December. It marked the fewest sales in a month since January 2015. The statewide median price was $557,600, up 1.4% from December 2017.
On a regional basis Los Angeles County’s median-price of $588,140 was up 1.8% 
from last December. Orange County had a median price of $785,000, down 0.1%
from December 2017. Ventura County’s median price of $640,000 was down 0.8% from last December. Inventory levels also continued to rise. Active listings have
increased 30% from 2017. The unsold inventory index hit record lows before moving up steadily in the last 9 months of 2018. There was a3.5-month supply of homes
listed in California, up from a 2.5-month supply in December 2017. It should be noted that a “normal market” has a six-month supply of homes listed, so inventory levels
which are well above the all-time lows of 2017 are still at low historical levels.
 Los Angeles County had a 3.5-month supply, up from a 2.4-month supply last
December. Orange County had a 4-month supply, down from 2.6 months last
December. Ventura County had a 5.5-month supply, up from a 4-month supply in
December 2017.

New Year’s Resolutions for your Home

1: Streamline the stuff

One of the best and least expensive ways to feel better about your home is to clear it of clutter.

Each year most of us acquire a mountain of stuff. Without some regular purging, cabinets and drawers get jam-packed and it becomes hard to find the things you use and enjoy the most. (All that clutter also makes your house look dated and dirty, designers say.)

This year resolve to go room-by-room periodically clearing anything that you don’t use, wear or love and donate it to charity. After that, think twice about what you bring in, says Antoinette Nue, an Atlanta consultant who specializes in helping people simplify and go green.

“Fill your home with the things that raise your energy level and make you feel good, and get rid of the things that drain your energy or are broken,” she says.

Stash useful (but not beautiful) items such as DVDs, remotes and those kicked-off shoes in simple woven baskets. Group similar items together on sleek trays, says Stuart McCormick, a designer with Liz Levin Interiors in Washington D.C.

Clear your counters of everything you don’t use on a daily basis. And get ready to breathe a little easier in your own home. 

2: Make it safe and sound

Your home may be beautiful, but is it safe?

First, check your house for radon. This colorless, odorless gas causes about 21,000 lung cancer deaths each year from the radioactive particles it traps in your lungs as you breathe, according to the U.S. Environmental Protection Agency. One in every fifteen homes has elevated levels. And with test kits costing as little as $20 at your local hardware store, there’s no reason not to get right on that.

While we’re on the subject of deadly gas, make sure you install a carbon monoxide detector on every bedroom floor in addition to fire detectors. If a chimney flue or furnace vent gets blocked or leaks, carbon monoxide could back up in your house and kill you. Like a radon test, this is a small investment — $40 or more — for such an important safeguard.

Watch out for dryer lint. We know you clean the little trap inside the door, but most people neglect to clean the vents and ducts behind the dryer. Lint may seem innocent, but it’s highly combustible, according to the U.S. Fire Administration, accounting for more than 15,000 building fires a year.

Make sure your house can breathe. Many people’s bathrooms and attics aren’t vented to the outside (or the vents are covered over with shingles.) This makes you a prime candidate for mold.

And if you’re considering a remodel — and your home was last built or remodeled before 1978 — consider testing for lead paint and asbestos flooring. It will have to handled properly during removal, or particles can be released into the air for you to ingest.

3: Shrink your bills (and your carbon footprint in the process)

When people think of going green, they often think it takes solar panels to make a difference.

Not so, says Bob Schildgen, who wrote the “Hey Mr. Green” column for Sierra magazine. It just takes a little old-fashioned common sense.

The best place to start is by cutting your energy usage in your home:

– Remember your mom’s advice and switch off the lights when you leave a room.

– Turn off your air conditioner when you leave the house and dial your heater down to 55 degrees at night.

– Install LED bulbs and low-flow showerheads.

– Turn off your power strips and/or set your home computer to revert to sleep mode when not in use.

– Water your yard less. Put in drought-tolerant landscaping if necessary.

– Give composting a try. Your garden will thank you.

4: Work out a weekly system for keeping your house clean

Here are a few tips for keeping the mess under control from Jeff Campbell. He is the author of the book Speed Cleaning and owner of the Clean Team housekeeping service in San Francisco.

Daily: Dishes go in the dishwasher every night – no excuses! Dirty clothes go in the hamper and jackets or clean clothes are hung in the closet. Bring everything back to its assigned place.

Weekly: Clean your entire house, using these tips:

– Keep all of your cleaners in a portable carryall that moves with you from room to room.

– Focus on one type of cleaning at a time. It’s faster, Campbell says. Wipe down fingerprints on all of the cabinets, for instance, before moving on to spraying and wiping counters. Then move on to windows and mirrors and appliances. Once that’s done move on to sweeping and then mopping floors.

– For optimum efficiency, enlist the help of your family. If you can, divide the jobs among at least three parties. One of you can do the dusting/vacuuming and changing beds. The other can do the bathroom cleanup, leaving only the kitchen and trash emptying for you to handle. The upside? You can get the whole house done in 45 minutes, Campbell says. Leaving more time on the weekends for the park or the movies.

5: Get your place ready for entertaining

Each year most of us vow to spend more time with family and friends. To make you feel like inviting people in, why not give the areas you entertain in a little update?

You don’t have go for broke here and invest in a new kitchen remodel. All it takes to get a fresh new look is a little bit of rearranging and a few updates, says designer McCormick.

One easy update that makes your home seem more “finished” is the addition of plants, she says.

“They bring in new energy and help clean the air,” she says. “And it’s a great way to decorate if you’re on a budget.”

Pulling out a new accent color from your existing decor can make the whole room seem fresh. Pick an underused color in the room and add more of it in the form of a new pillow or throw to update your look, McCormick advises. A colorful rug or runner can also help anchor your space.

Lastly, take some time to rearrange your furniture so it is oriented in conversation groups and not just facing the television. That just might up for chances for real conversation and connection in the New Year.

Courtesy of HGTV

Economic update for the week ending October 27, 2018

Stocks suffer a turbulent week:

A positive GDP report showing that the economy grew at 3.5% in the third quarter, inflation was tame, and consumer spending was up, could not keep the markets from continuing to slide. This week. third quarter profits were reported that were below expectations. Those were mostly in the technology sector. Even Amazon did not hit their numbers. On the other hand, some companies like Ford and Tesla exceeded expectations. All in all, fears in the technology sector hit the NASDAQ hard. It lost 3.8% for the week and is now up just  3.8% for the year after being up 20% for the year just one month ago. The Dow and S&P also got hit hard down 3% and 3.9% respectively for the week. The Dow Jones Industrial Average closed the week at 24,688.31, down from 25,444.34 last week. It is down 0.1% year-to-date.  The S&P 500 closed the week at 2,658.69, down from 2,767.78 last week.  It’s down 0.6% year-to-date. The NASDAQ closed the week at 7,167.21, down from 7,449.03 last week.  It’s up 3.8% year-to-date.

Treasury Bond Yields lower this week:

The 10-year Treasury bond closed the week yielding 3.08%, down from 3.20% last week. The 30-year Treasury bond yield ended the week at 3.32%, down from 3.38% last week. We watch treasury bond yields because mortgage rates follow bond yields.

Mortgage rates almost unchanged this week:

The October 25, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.86%, almost unchanged from 4.85% last week. The 15-year fixed was 4.29%, slightly up from 4.26% last week. The 5-year ARM was 4.14%, up from 4.10% last week.

GDP up 3.5% in third quarter:

The U.S. Bureau of Economic Analysis announced that the first reading of the nation’s gross domestic product (GDP) rose by 3.5% in the third quarter of 2018.  That beat expectations of a 3.4% rise, but was well below the 4.2% increase registered in the second quarter of 2018. The report also said that The PCE price index, a key indicator of inflation, rose at a 1.6% annual rate in the quarter. That was well below the 2.2% annual increase analysts forecasted. Consumer spending, which accounts for about two thirds of the U.S. economy, grew by 4% in the third quarter. That marked the largest increase since the fourth quarter of 2014.

September Nationwide Existing Home Sales:

Data released this week from The National Association of Realtors showed that total existing home sales fell again in September. The number of existing homes sold in September fell 3.4% from August, and are down  4.1%  from one year ago. The median price paid for a home in the U.S. was up 4.2% from last September. That marked the 79th straight month of year over increases. The unsold inventory index is at a 4.4 month supply, up slightly from a 4.2 month supply one year ago. 

September California Existing Home Sales:

The California Association of Realtors reported that existing single family home sales totaled 382,550 in September on a seasonally adjusted annualized rate. That was down 4.3% from August and down a staggering 12.4% from last September, when sales totaled 436,920 on a seasonally adjusted annualized rate. The median price paid for a home in California was $587,850, up 4.2% from September 2017. On a more regional level, the median price increased 4.7% in Los Angeles County, 10.6% in Ventura County, and 3.3% in Orange County from one year ago. Inventory levels continued to rise after hitting historic lows in 2017. The unsold inventory index in California stood at a 4.2 month supply in September, up from a 3.3 month supply in September 2017. Inventory levels have now increased for 6 straight months and are up 20.4% from one year ago. Listings are at the highest level in 31 months. Los Angeles County has a 4.4 month supply, up from a 3.1 month supply last September. Orange County has a 4.3 month supply,  up from 3.1 months last September. Ventura County had a 6.3 month supply of homes, up from a 4.7 month supply one year ago. 

Have a great weekend!
Syd

Economic update for the month ending September 30, 2018

Economic update for the month ending September 30, 2018

U.S. Economy adds 134,000 new jobs in September – Unemployment rate dropped to the lowest level since 1969:

U.S. Department of Labor
U.S. Department of Labor

The Department of Labor Statistics reported that U. S. employers added 134,000 new jobs in September. That was below the 185,000 that analysts had estimated, yet even though job creation fell to its lowest level in a year the unemployment rate dropped to its lowest level in 49 years. The national unemployment rate in September was 3.7%, down from 3.9% in August. Average hourly wages rose 2.8% year over year from last September. That was slightly lower than last month when average hourly wages increased 2.9% from last August.

California employers add 44,800 new jobs in August:

The California Employment Development Department reported that 44,800 new jobs were added in August. The unemployment rate held steady at a record low of 4.2%, down from 4.6% last August. Average hourly wages  grew 3.1% year over year, their largest year over year increase since last October. Los Angeles and Orange County average hourly earnings grew 5.4% from last August. 

 Stock Market Update:

NYSE-NEW YORK, NY

The Dow Jones Industrial Average closed the month at 26,458.31, down from 25,964.62 last month. It is up 7% year to date. The S&P 500 closed the month at 2,913.98, down from 2,901.52 on August 31 It’s up 9% year to date. The NASDAQ closed the month at 8,046.35, down from 8,109.54 last month. It’s up 16% year to date.

Treasury Bond Yields rise: 

The 10-year treasury bond closed the month yielding 3.05%, up from 2.86% on August 31, 2018. The 30-year treasury bond yield ended the month at 3.19%, up from 3.02% at the end of August.

Mortgage rates higher in September: 

The September 27, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.72%, up from 4.52% on August 30, 2018. The 15-year fixed was 4.16%, up  from 3.97% in August 30. The 5-year ARM was 3.97%, up from 3.85% last month.

Consumer Confidence at highest level hits 18 year high in September:

The U.S. Consumer Confidence Index hit its highest level since 2000 this week according to data from the Conference Board’s September survey.

New home sales rebound in August:

The Commerce Department reported that sales of new homes increased 3.6% in August from July on a seasonally adjusted annualized rate. Year over year the number of new homes sold in August increased 12.7% from August 2017. The median price paid for a new home increased 1.9% from one year ago.

California existing home sales numbers drop in August – Prices continue to rise:

The California Association of Realtors reported this week that the number of existing home sales dropped in August to a seasonally adjusted annualized rate of 399,600. It was the fourth straight month of sales declines and the first time in over two years that the number of existing home sales dropped below the benchmark 400,000 level. The median price of a home in California rose to $596,410, up 6.6% from August 2017. On a regional basis the Los Angeles County median price rose 6.4%, Orange County rose 6,3%, and Ventura County rose 3.1% from last August. Housing inventory levels rose 17.2% from one year ago, the fifth straight month of housing supply increases. The unsold inventory index in August was a 3.3 month supply of homes listed for sale, up from 2.9 months in August 2017.

U.S. existing home sales:

The National Association of Realtors reported that total existing home sales equaled 5.34 million on a seasonally annualized rate, down 1.5% from August 2017. The nation wide median price grew 4.6% in August compared to one year ago marking the 78th straight month of year over year increases in the median price. Total housing inventory also increased. There was a 4.3 month supply of active listings in August, up from a 4.1 month supply in August 2017.

Have a great week!

-Syd