The Federal Reserve attempts to regulate accelerated inflation by raising interest rates for the third time this year, as reported by HousingWire. The Fed’s key rates have increased by .25 percent, to a current total of 2.25 percent. This rate hike is now the eighth since 2015, as the Federal Reserve is pressured by a booming job market and active economic growth.
Some experts predict that the Fed will attempt to prevent the burning out of the economy by incrementally boosting interest rates in light of the increased rate of employment growth. However, others believe interest rates should remain stagnant, so long as inflation does not exceed too far above the 2 percent target.
While increased interest rates usually generate anxiety over the stability of homebuyer demand, First American Chief Economist Mark Fleming believes the strength of the economy should alleviate any negative effects caused by rising interest rates.
“The boost from the strong economy and first-time home buyer demand should overcome any downward pressure from rising rates on home sales. While the pace of sales may initially slow, home buyers typically adjust to the new rate environment,” said Fleming.
In other real estate news this week:
- CNBC reported Amazon’s most recent effort to monopolize the smart home market. The company announced that their Alexa Fund has invested in Plant Prefab, a start-up company based in South California. Plant Prefab builds prefabricated custom single and multifamily houses with sustainable construction process and materials. Zion Market Research predicts that the smart home market will advance to be a $53 billion industry by the year 2022. The firm Obvious Ventures, co-founded by Twitter’s Ev Williams, joined Amazon in financing Plant Prefab’s $6.7 million funding round.
- A CoreLogic study released new data regarding Hurricane Florence’s residential and commercial flood and wind loss measurements. The recent research found that flood loss for residential and commercial properties, including storm surge and inland flooding, estimated to be between $19 billion and $28 in North Carolina, South Carolina, and Virginia. Further, the uninsured flood loss for the same three states is estimated to be between $13 billion and $18.5 billion. The study approximated wind losses to be an added $1 billion to $1.5 billion.
- This August, new residential home sales increased by 3.5 percent, bucking the previous two-month decline. Inman reported the U.S. Census Bureau’s and U.S. Department of Housing and Urban Development’s updated residential sales report, noting a 12.7 percent year-over-year surge. The Midwest region led the nation in home sales with a 13.2 percent uptick. The Northeast region fell behind with a 12.8 percent decrease in sale, the only region to show a recession in sales. The South and West region both experienced increases in sales, with an 8.4 percent and 5.9 percent surge.
- The American credit score average has reached a record high of 704, marking the eighth consecutive year of increases, according to Bloomberg. Fewer consumers have scores under 550, and fewer delinquencies are causing consumers to move up into the 650 to 699 range. On the higher end of the spectrum, 22 percent of consumers with FICO scores have risen to the “super-prime” club, with scores of 800 or above. However, the FICO study has found that the percentage of bank card accounts that are more than 90 days overdue has risen from 7.7 percent in 2017 to most recently 8.2 percent.
- Fannie Mae launched The Innovation Challenge as the company’s effort to encourage a healthier housing future. HousingWire reported that Fannie Mae’s Sustainable Communities Initiative formulated the Challenge, sponsoring the two-year, $10 million commitment. The program will focus on generating ideas and challenging public, private, and nonprofit organizations to envision affordable housing as the solution to improved quality of life. “The Innovation Challenge addresses the evolving needs of homebuyers, homeowners and renters where they overlap with health and wellness issue,” Hayward said. “Access to affordable homes that keep residents safe and healthy is a critical industry issue, and one that requires us to look at how housing and health impact each other in order to find the best solutions.”
- Remine, a multiple listing service platform, launched mobile MLS network Remine Mobile. HousingWire reported that the mobile platform covers the 35 largest MLS markets in the country and is available for its roughly 750,000-member agents. Remine Mobile will allow users access to new opportunities on the go and will provide contact information for over 300 million consumers. The platform utilizes a chat function for conversations between agents. “We believe in data portability such as our Saved Search API which ushers in a new era of transparency and portability across all vendors and platforms. Gone are the days of closed systems and stifling vendor relationships,” said Remine COO Jonathan Spinetto.