Doubled-up Households Increase
A “doubled-up” household is when a residence has more than one set of people living in it. The most common example is when working adults move back in with their parents. Zillow Research has revealed some interesting trends:
– Nationally, 32 percent of working-age adults – aged 23 to 65 – live in doubled-up households, up from 25 percent in 2000 and 26 percent in 1990
– Employed U.S. adults in doubled-up households make 76.3 percent as much as employed adults in general, or roughly 76 cents for every dollar made by all adults
– The proportion of adults doubling-up is higher in more expensive markets
As rents rise and income growth remains flat in many areas, renters are increasingly forced to devote an ever-larger share of their monthly income towards rent. In the second quarter, a typical American renting household spent 29 percent of their income on rent, compared to 25 percent in 1990 and 24 percent in 2000.
Nationally, employed adults in doubled-up households make 76.3 percent as much as employed adults in general, or roughly 76 cents for every dollar made by all adults. By doubling-up, a combined income is better able to compete for housing with individuals and families in a position to forgo doubling.
But does this point the way to pent up demand for housing? It just may. These “doubled-up” households are able to create some savings for a down payment. Also, an improving labor market, uber low fixed mortgage rates, more available inventory and steady appreciation make home ownership attractive to these individuals. Oh and you just know that their parents can only take them for so long too 🙂
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +62 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to decrease from the prior week. We saw our best rateson Wednesday and our worst rates on Tuesday.
We had a very volatile week with a huge spread of 203 BPS from our highs to our lows.
We had the “perfect storm” for a huge MBS rally on Wednesday with the combination of much weaker than expected domestic Retail Sales data and a big dash of concern over Europe as well as speculation about our own QE.
Germany and several other countries had weaker than expected manufacturing data. Traders were also concerned about deflation as year-over-year inflation was flat to even negative for about half of the European Union members. The European Central Bank has yet to start their asset purchase program that they promised would start this month. But major components of that plan are on hold as German courts (as well as 30K plaintiffs) say that it is against the rules of the ECB’s charter and/or Germany’s own rules. This caused many foreign investors to shift their money into U.S. bonds which helped our rates improve.
As we mentioned, we had weaker than expected Retail Sales (-0.3% vs est of -0.1%) but the rest of our economic data was strong with Initial Weekly Jobless Claims hitting their lowest level since April of 2000, Industrial Production shot up +1.0% (vs est of only 0.4%), Consumer Sentiment was very high at 86.4 and surprised to the upside and the Fed’s Beige Book showed some upbeat progress in their 12 districts.
There were several interviews and speeches by different Federal Reserve Presidents (not all of them are voting members of the FOMC). Much attention was paid to comments that ranged from QE4 needs to happen, that Treasury and MBS purchases should go on longer (they actually end this month), to nothing needs to change unless we see a real trend change. But there was no official announcement and their is no new policy for rates, etc.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|21-Oct||10:00 AM||Existing Home Sales||–||5.11M||5.05M|
|22-Oct||7:00 AM||MBA Mortgage Index||–||NA||5.60%|
|22-Oct||8:30 AM||Core CPI||–||0.20%||0.00%|
|22-Oct||10:30 AM||Crude Inventories||–||NA||8.923M|
|23-Oct||8:30 AM||Initial Claims||–||283K||264K|
|23-Oct||8:30 AM||Continuing Claims||–||2390K||2389K|
|23-Oct||9:00 AM||FHFA Housing Price Index||–||NA||0.10%|
|23-Oct||10:00 AM||Leading Indicators||–||0.60%||0.20%|
|23-Oct||10:30 AM||Natural Gas Inventories||–||NA||94 bcf|
|24-Oct||10:00 AM||New Home Sales||–||473K||504K|
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.