Choosing the right house and mortgage

It’s Just The Facts: September 2019

  1. A NEW HIGH – After adjusting numerical data from the past for the impact of inflation, the median household income in 2018 ($63,179) is the highest ever recorded in the USA and the 3rd consecutive year (2016-2018) that produced an all-time inflation-adjusted record. Before 2016, the peak for median household income was $61,526 set in 1999 (source: Federal Reserve Bank of St. Louis).
  2. COULD IT HAPPEN? – The wealthiest one-tenth of 1% of US households (top 122,000 households) are estimated to own 20% of total US wealth, i.e., 20% of $109 trillion. An annual 1% “wealth tax” levied on this group would generate $218 billion per year in tax revenue (source: The Brookings Institute).
  3. REALLY LOW – The unemployment rate in the USA was 3.7% in August 2019, the 7th consecutive month that the nation has reported a jobless rate of 3.8% or less. The USA has not had a “jobless rate streak” of 3.8% or less for that long of a period since December 1969 or almost 50 years ago (source: Department of Labor).
  4. LESS HELD BACK – The $1.35 trillion of excess reserves held by US banks at the 12 regional Federal Reserve banks as of 8/28/19 is down $860 billion from the $2.21 trillion held 2 years ago. Excess reserves are funds held that are above and beyond the federally mandated reserve requirement amounts (source: Federal Reserve).
  5. THEY DO NOT LAST FOREVER – There have been 10 recessions in the United States since 1950, the most recent being an 18-month downturn that ended in June 2009. The average length of the 10 recessions since 1950 is 11 months (source: National Bureau of Economic Research).
  6. MAKING THINGS – The number of manufacturing jobs in the United States peaked in June 1979 (40 years ago) at 19.55 million, fell to a low of 11.45 million in March 2010, and now has rebounded to 12.85 million in August 2019 (source: Department of Labor).
  7. THE BANK OWNS IT NOW – Lenders repossessed 11,493 homes in August 2019, down 47% from 21,640 repossessions in August 2018. The all-time record for bank repossessions in a single month in US history: 102,134 in September 2010 (source: Attom Data Solutions).
  8. REALLY LONG – In an effort to “lock-in” historically low interest rates, the Treasury Department stated on 9/12/19 that they are considering issuing a 50-year Treasury bond in 2020 (source: Steven Mnuchin, Treasury Secretary).
  9. ALMOST A MILLION BUCKS – If the nation’s aggregate net worth of $113.5 trillion was spread equally across all 122.5 million US households, every American household would be worth $927,000 (source: Federal Reserve).
  10. PLANNING AHEAD – 77% of private sector workers had access to and participated in employer-provided retirement benefits in March 2019. 91% of public sector workers, i.e., government workers, had access to and participated in employer-provided retirement benefits in March 2019 (source: Department of Labor).
  11. DISAGREEMENT – The Federal Reserve Board consists of the 7 members of the Fed’s Board of Governors (which has 2 vacancies currently) and the presidents of the 12 regional Federal Reserve banks, i.e., there are 17 current members of the Federal Reserve Board. At the 9/18/19 Fed meeting where an interest rate cut was approved, 7 of the 17 supported an immediate rate cut and saw the need for an additional rate cut later in 2019, another 5 of the 17 supported an immediate rate cut but anticipated no further action during 2019, and the final 5 of the 17 did not support the most recent rate cut or any other reductions in 2019 (source: Federal Reserve).
  12. TWELVE-YEAR HIGH – New residential construction in the US totaled 121,100 housing units in August 2019, its highest total recorded since August 2007. The total includes 82,600 single family homes, 1,800 apartment buildings with 2-4 units and 36,700 apartment buildings with 5 or more units (source: Census Bureau).
  13. BIGGER LOAN – On 1/03/19, the national average interest rate for a 30-year fixed rate mortgage was 4.51%, producing a $507 monthly principal and interest payment per $100,000 borrowed. The same $507 payment at last week’s 3.64% national average would allow a home buyer to borrow $111,027 (source: Fannie Mae)

Courtesy of Mortgage Market Guide