Foreclosure Headlines

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In April, home prices increased about 5.5% from last year, according to the latest S&P CoreLogic Case-Shiller results, and experts predict that increase will continue throughout this home-buying season.

While home prices increased, they slowed their pace from last year, but one expert says homebuyers shouldn’t expect relief anytime soon from the rising home prices.

“Home prices slowed slightly from last year, but homebuyers again face a challenging market as prices rose again from last month,” Trulia Senior Economist Cheryl Young said. “However, with mortgage rates relatively unchanged, expect relentless demand to continue through spring’s home-buying season despite chronically low inventory and escalating prices.”

One expert explained the reason for the rising home prices: high demand due to Millennials aging into homeownership, a booming labor market and growing wages, mixed with low housing inventory.

“Homebuilders aren’t matching historic building levels, and it’s unclear whether rising costs, burdensome regulations, a shortage of land to build on, a lack of construction financing or some combination of all these factors is to blame,” Zillow Chief Economist Svenja Gudell said. “A surge in the share of single-family homes being converted into rentals is keeping many homes off the market that otherwise may have traded hands every few years.”

Gudell explained there is no quick fix to the rising inventory concerns and increasing competition. And another expert agreed rising home prices will be slow to react to changes in market conditions.

“New construction has only recently begun to bring entry-level products into many markets and we expect it will take some time for this to have noticeable impact on market conditions,” Keller Williams Economist Ruben Gonzalez said. “Price gains are only likely to be subdued if we see a deterioration of demand as a result of rising interest rates at some point this year.”

However, one expert claimed just the opposite – saying there are several factors that could quickly turn the tide.

“Two conditions in today’s market that can quickly change the home-price trend are swings in the labor market or home inventory,” said Bill Banfield, Quicken Loans executive vice president. “Both of these factors have remained largely constant throughout the year, and we’re seeing this reflected in most metro areas of the housing market.”  https://www.housingwire.com/ar...6777&bid=1798471

Inflation News

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Rates are jumping right now after global central bankers promised inflation is eventually coming. Bond yields jumped dramatically in Europe and are rising in the U.S. as central bankers have re-emphasized inflation.

The moves started when European Central Bank head Mario Draghi said the European economy was "strengthening and broadening."

But it was this comment that got the bond and currency markets moving: "Now, we can be confident that our policy is working and that those risks have abated. The threat of deflation is gone and reflationary forces are at play."

There's the magic word: reflation. On that, the euro rose to almost its highest level since November of last year. In Germany, 10-year bond yields rose 12 basis points, to 0.37 percent, a 40 percent increase, and French 10-year yields rose 19 percent.

What's odd is Draghi's insistence that the bank's current stimulus program needs to stay in place because inflation still is more muted than expected.

Draghi, of course, is playing the old game of talking both sides of his book, but Peter Tchir, macro strategist for Brean, told me the markets were reacting to that magic word, reflation: "The bond markets are clearly focusing on the 'new news' of Draghi talking reflation rather than the 'old news' that inflation is muted," he told me.

Whether there are longer-term effects to his remarks are not yet clear. However, central bankers seem eager to talk up reflation. Philadelphia Federal Reserve President Patrick Harker today reiterated that the Fed remains on track for another 2017 rate hike, and that recent inflation weakness appears to be temporary. He said, though, that he believes the Fed will not achieve its inflation target of 2 percent until early 2018.

Bond yields are up in the U.S. as well. The U.S. 2-year note hit a high yield of 1.377 percent, the highest level back to March 15.

"People have been long Treasuries right across the board, and I think these comments are triggering some stop losses," Tchir told me. "The idea of staying long bonds as a hedging strategy for stocks is getting a little long in the tooth."  http://www.cnbc.com/2017/06/27...nkers-inflation.html

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