• The median price, or midpoint, of homes that sold in August was $480,000, a 0.1% drop from $480,592 in August 2022. Home prices had increased each month from December 2014 to November 2022, but began to slide late last year and now have declined on a year-over-year basis in eight out of the last nine months.  

• The supply of homes listed for sale totaled 2,420 in August, down 8.3% from the same month last year. On the one hand, August’s listings were the most for any month since November, yet they remained far below pre-Great Recession years, when August inventories often topped 3,000 and 4,000.

The Springs-area housing market, like that of many other cities, has done an about-face since the second half of last year because of higher long-term mortgage rates.

For years, historically low rates in the neighborhood of 3% for a 30-year, fixed-rate loan helped spur a furious demand for single-family homes. That demand, coupled with a shortage of properties for sale, sent Springs-area median home prices soaring over several years; in June 2022, they hit a record high of $495,000.

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After the Federal Reserve began to hike interest rates last year to tamp down surging inflation, mortgage rates rose, too, and roughly doubled to more than 6% for 30-year loans by the end of last year.

That trend of high rates continued through the first several months of this year. In mid-August, long-term mortgages topped 7%; last week, the national average for a 30-year, fixed rate mortgage was 7.18%, according to mortgage buyer Freddie Mac.

Higher rates have priced many homebuyers out of the market and sent sales plunging.

Local real estate agents, however, have said that the demand for homes remains relatively strong. As a result, and combined with tight inventories, prices haven’t plunged, though they are down from their record highs.   

The new home side of the Springs-area housing market also has felt the effects of higher mortgage rates.  

In August, 127 permits were issued for the construction of single-family, detached homes, according to a new Pikes Peak Regional Building Department report. August’s tally was up 15.5% compared with the same month last year.

But the pace of home construction through the first eight months of this year remains well behind the same period in 2022, Regional Building Department figures show. Through August of this year, single-family detached permits totaled 1,655, down 36.4% from 2,604 on a year-over-year basis.

Source: gazette.com

Apache is functioning normally

An abrupt change of plans A major renovation to the place turned it into a reproduction of the historic home of George and Martha Washington, where her parents also lived with her and her husband. “We couldn’t find an old house to renovate,” she said. “We ended up building a replica of Mt. Vernon and … [Read more…]

Apache is functioning normally

In a new report from First American, Chief Economist Mark Fleming reveals that two of the three key drivers of the Real House Price Index (RHPI), nominal house prices and mortgage rates, dragged affordability lower in June. The 30-year, fixed mortgage rate increased by 0.3 percentage points and nominal house prices accelerated by 0.8% compared with May.

The Three Key Drivers of the RHPI:

  1. Median Household Income is one of the fundamental factors determining the amount of housing a particular consumer can afford. incomes can be tracked over time to demonstrate how rising/falling incomes impact consumer house-buying power.
  2. Interest rates drive how much a home buyer can leverage their median household income to purchase more or less housing. As interest rates fall, consumers are able to purchase a more expensive house due to lower borrowing costs. The opposite is true for rising rates.
  3. House price levels are measured using a weighted repeat-sales house price index that tracks how prices of single-family residential properties rise and fall over time and across numerous geographies.

While household income increased by 0.4%, it was not enough to offset the affordability-dampening impact from higher mortgage rates and prices. Consumer house-buying power declined by nearly $9,000 compared with May and remains $32,000 lower than one year ago. Fleming predicts the outlook for house-buying power to be heavily dependent on the path for mortgage rates, and that path is highly uncertain.

“It’s likely that mortgage rates continue to hover in the 6.5-to-7.5% range for the remainder of the year, which means affordability will remain a challenge for many homebuyers,” said Fleming.

How High Will Mortgage Rates Go?

The RHPI can be referenced to model shifts in income and mortgage rates to see how they impact consumer house-buying power or affordability. Rising incomes and falling mortgage rates each boost house-buying power, while falling incomes and rising mortgage rates each sap house-buying power.

As of mid-August, the average mortgage rate nationally sits at approximately 7%. In June of last year, the average mortgage rate nationally was roughly 5.5%. Holding incomes constant at their June 2023 level and assuming a 5% down payment, the increase in mortgage rates alone reduced house-buying power by nearly $57,000.

An average of several industry forecasts projects that mortgage rates will end the year lower, at 6.1%. If those forecasts are correct and the average mortgage rate decreases from the 7% level to 6.1%, house-buying power increases by nearly $32,000. However, if mortgage rates drifted upward to 7.5%, house-buying power would fall by an estimated $16,000.

Uncertain Outlook for Mortgage Rates

The 30-year fixed mortgage rate is loosely benchmarked to the 10-year Treasury bond. Since the end of the Great Recession, the 30-year fixed mortgage rate has on average remained 1.7 percentage points (170 basis points) higher than the 10-year Treasury bond yield. The spread usually widens during periods of economic or geopolitical uncertainty, as is the case in today’s market.

As the industry forecasts predict, it’s reasonable to assume that the spread and, therefore, mortgage rates will moderate later in the year if the Federal Reserve stops further monetary tightening and provides investors with more certainty. However, it’s unlikely that mortgage rates will revert to the 5.5% levels of 2022 until inflation has moved closer to the Federal Reserve’s 2% target and it begins loosening monetary policy, or there’s a significant economic downturn.

To read the full RHPI, click here.

Source: themreport.com

Apache is functioning normally

AA stimulus package is a set of financial measures put together by central bankers or government lawmakers with the aim of improving, or “stimulating,” an economy that’s struggling.

Individuals in the U.S. during the past two decades have witnessed two major periods when government stimulus packages were used to boost the economy: first, after the 2008 financial crisis, and second, following the 2020 outbreak of the Covid-19 pandemic.

While viewed by some as key to reviving growth, economic stimulus packages are not without controversy. Here’s a closer look at how they work, the different types of stimulus packages, and their pros and cons.

Government Stimulus Packages, Explained

What is a stimulus package? The foundational theory behind these economic stimulus packages is one developed by a man named John Maynard Keynes in the 1930s.

Keynes was a British economist who created his theory in response to the global depression of the era. His conclusion was that, when a government lowers taxes and increases its spending, this would stimulate demand and help to get the economy out of its depressed state.

More specifically, when taxes are lowered, this helps to free up more income for people; because more is at their disposal, this is referred to as “disposable income.” People are more likely to spend some of this extra money, which helps to boost a sluggish economy.

When the government boosts its spending, this also puts more money into the economy. The hoped-for results are a decreased unemployment rate that will help to improve the overall economy.

Economic theory, of course, is much more complex than that, and so are government stimulus packages.
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Different Types of Stimulus

Monetary Stimulus

To get a bit more nuanced, monetary stimulus is something that occurs when monetary policy is changed to boost the economy.

Monetary policy is how the supply of money is influenced and interest rates managed through actions taken by a central agency. In the U.S., that agency is the Federal Reserve Bank.

Ways in which the Federal Reserve can use monetary policy to stimulate the economy include cutting policy rates, which in turn allows banks to loan money to consumers at lower rates; reducing the reserve requirement ratio, and buying government securities.

When the reserve requirement ratio is lowered, banks don’t need to keep as much in reserve. That means they have more to lend, at lower interest rates, which makes it more appealing for people to borrow money and get it circulating in the economy.

Fiscal Stimulus

Fiscal stimulus strategies focus on lowering taxes and/or boosting government spending. When taxes are lowered, this increases the amount of money that people have left over from a paycheck, and that money could be spent or invested.

When money is spent on a greater amount of products, this increases demand for those products — which in turn helps to reduce unemployment because companies need more employees to make and sell them.

If this process continues, then employees themselves become more in demand, which makes it more likely that they can get higher wages — which gives them even more funds to spend or invest.

When the government spends more money, this can increase employment, giving workers more money to spend, which can increase demand — and so, it is hoped, the upward cycle continues.

In the U.S., a federal fiscal package needs to be passed by the Senate and the House of Representatives — and then the president can sign it into law.

Quantitative Easing

Quantitative easing (QE) is a strategy used by the Federal Reserve when there is a need for a rapid increase in the money supply in the United States and to boost the economy.

For example, on March 15, 2020, the Federal Reserve announced a $700+ billion program in response to COVID-19. In general, QE involves the Federal Reserve buying longer-term government bonds, among other assets.
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Pros and Cons of Stimulus Packages

There are advantages and disadvantages to economic stimulus packages, including the following:


The goal of a stimulus package, based on Keynesian theory, is to revive a lagging economy and to prevent or reverse a recession, where the economy is retracting rather than expanding. This is a more immediate form of relief as the government also uses monetary, fiscal, and QE strategies to boost the overall economy.

This might include the Fed cutting interest rates, which lowers the rate at which banks loan money to consumers. That can encourage individuals to borrow money, which gets it circulating in the economy.

Taxes may also be lowered, which means workers have more money from each paycheck to spend. That spending may, in turn, increase the supply and demand for products, which can help both employees and businesses.


However, there are also risks to implementing stimulus packages. An economic theory that runs counter to Keynesian theory is the crowding out critique. According to this thinking, when the government participates in a deficit form of spending, labor demands will rise, which leads to higher wages, which leads to lower bottom lines for businesses.

Plus, these deficits are initially funded by debt, which causes an incremental increase in interest rates. This means it would cost more for businesses to obtain financing.

Other criticisms of stimulus spending focus on the timing of when funds are allocated and that central governments can be less efficient at capital allocation, which ultimately leads to waste and a low return on spending.

Another risk is that the central bank or government over-stimulates the economy or prints too much fiat currency, leading to inflation, or rise in prices. While a degree of inflation is normal and healthy for a growing inflation, price increases that are rapid and out of control can be painful for consumers.

Previous Economic Stimulus Legislation

Perhaps the most sweeping stimulus bill ever created in the United States was signed into law by President Franklin Delano Roosevelt on April 8, 1935.

Called the Emergency Relief Appropriation Act and designed to help people struggling under the Great Depression, Roosevelt simply called it the “Big Bill”; it is now often referred to as the “New Deal.” Five billion dollars was provided to create jobs for Americans, who in turn built roads, bridges, parks, and more.

The Works Progress Administration (WPA) came out of the New Deal, ultimately employing 11 million workers to build San Francisco’s Golden Gate Bridge, LaGuardia Airport in New York, Chicago’s Lake Shore Drive, about 100,000 other bridges, 8,000 parks, and half a million miles of roads, including highways.

Another agency, the Tennessee Valley Authority, collaborated with other agencies to build more than 20 dams, which generated electricity for millions of families in the South and West.

More Recent Stimulus Packages

Additionally, there was the American Recovery and Reinvestment Act (ARRA) in 2009. This was passed into law in response to the Great Recession of 2008 and is sometimes called the “Obama stimulus” or the “stimulus package of 2009.” Its goal was to address job losses.

This Act included $787 billion in tax cuts and credits, as well as unemployment benefits for families. Dollars were also provided for infrastructure, health care, and education, and the total funding was later increased to $831 billion.

More recently, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was passed by the United States Senate on March 25, 2020. On March 27, 2020, the House of Representatives passed the legislation and the President signed it into law the same day.

And in March 2021, the American Rescue Plan was passed by the House and the Senate and signed into law by President Biden. This emergency relief plan included payments for individuals, tax credits, and grants to small businesses, among other things.

The Takeaway

Stimulus packages are used to prop up economies when they are struggling or on the brink of a major recession, or even depression. While in recent decades, such stimulus packages have been credited by some for helping the U.S. economy out of the 2008 financial crisis and 2020 Covid-19 pandemic, others worry that the increase in government deficit is unhealthy, and all that spending could lead to inflation.

For individuals, devising a strategy to help save and invest during times when the economy is struggling — and in general — can be important to achieving their financial goals. Chatting with a financial planner about those goals may be helpful for some when it comes to putting together a plan to save for the future.

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Are there stimulus packages for small businesses?

Yes. For example, as part of the American Rescue Plan, small businesses that closed temporarily or had declining revenues due to COVID were extended a number of tax benefits to help with things like payroll taxes. There were also funds put toward grants for small businesses as part of this economic stimulus package.

How do stimulus packages fight recessions?

Economic stimulus packages are thought to help fight recessions by lowering taxes and increasing spending. The idea is that these measures would boost demand and improve the economy, and thus help avoid or fight recession.

What disqualifies you from getting a stimulus package?

Some reasons that could disqualify you from getting a stimulus package include having an income that’s deemed too high, not having a Social Security number, or not being a U.S. citizen or U.S. national.

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Source: sofi.com

Apache is functioning normally

When Warren Buffett-led conglomerate Berkshire Hathaway (BRK.A -0.07%) (BRK.B -0.11%) recently released an updated look at its massive stock portfolio, we learned that Buffett and his team added shares of not one, but three different homebuilders. Berkshire bought D.R. Horton (DHI 0.59%), NVR (NVR 0.96%), and Lennar (LEN 0.01%), with a combined investment value of nearly $800 million.

While these are all excellent homebuilders with strong track records of growth, as well as attractive valuations, there’s one homebuilder stock I’ve been buying in my own portfolio that I believe could perform even better for patient long-term investors. Here’s a rundown of why Buffett might be so attracted to homebuilder stocks right now, and why I prefer to invest in the homebuilding industry with smaller player Dream Finders Homes (DFH 0.80%) instead.

Why homebuilders?

Let’s not sugar-coat it. The real estate market in the United States is pretty bad right now. A combination of soaring home prices and mortgage rates at multi-decade highs has pushed many would-be homebuyers to the sidelines.

However, there are always some people who need homes. People still get transferred to a different part of the country for their jobs, and some people need to move to be closer to relatives or friends. And this is where homebuilders are winning.

In simple terms, existing home inventory is extremely low. Roughly half of pre-pandemic levels. Millions of homeowners have mortgages with 3% (or even lower) interest rates and don’t want to give them up. So, new homes are making up a disproportionate percentage of available homes on the market. Not only that, but homebuilders have the ability to offer incentives – including promotional mortgage rates – that private sellers can’t.

Why Dream Finders Homes?

There are two key factors that make Dream Finders stand out.

First, Dream Finders uses the same land-light business model that NVR uses. The short version is that unlike most homebuilders, Dream Finders and NVR don’t buy any land until they’re ready to start building a home on it. They don’t buy large tracts of land to gradually build on. This keeps capital requirements low and allows the business to regularly generate returns on equity of 40% or more.

Second, Dream Finders is in the relatively early stages of growth and focuses on some of the fastest-growing Sun Belt housing markets in the United States. In addition to its home market of Jacksonville, Dream Finders also has a large presence in Orlando, the Carolinas, Texas, and other markets where homes are still (relatively) affordable, and job and wage growth exceeds the national average.

The company’s track record has been impressive so far. Founder and CEO Patrick Zalupski started the building in the wake of the Great Recession in 2009 and has grown it to the point where it expects to close on 6,500 homes this year, despite the difficult market. And speaking of the difficult real estate market, in the second quarter, Dream Finders grew its revenue by 19% year-over-year and ended with a backlog of nearly 5,300 homes.

To be fair, we don’t know for sure that Buffett and his team don’t like Dream Finders. With a market cap of just $2.5 billion, it could simply be too small to attract Buffett’s attention. The smallest of Buffett’s three builders has a market cap that is about eight times Dream Finders’ size. But if you’re a long-term investor, Dream Finders is making all the right moves to evolve into one of the major players in the space in the years to come.

An attractive valuation, even after incredible stock performance

The market has certainly acknowledged Dream Finders’ strong results and the better-than-expected environment for homebuilders in general. Since the beginning of 2023, Dream Finders’ stock price has roughly tripled.

Even so, it looks like an attractive stock at these levels. The real estate market is bad all around – it’s just better for homebuilders than for existing homes, but it’s still not great. There is tremendous appetite for household formation, which could be a massive catalyst for the entry-level homes Dream Finders does so well, once inflation and economic fears normalize. Even after its tremendous performance so far this year, Dream Finders still trades for less than 13 times forward earnings. I’ve added to my own position at these levels, and plan to keep incrementally building it for as long as the company keeps producing strong results.

Matthew Frankel, CFP® has positions in Berkshire Hathaway and Dream Finders Homes. The Motley Fool has positions in and recommends Berkshire Hathaway, Dream Finders Homes, Lennar, and NVR. The Motley Fool has a disclosure policy.

Source: fool.com