All Forum Posts by: Tariq Hakeem

Home prices in March were 13.2% higher in March, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index. That’s up from the 12% annual gain in February, and it marks the 10th straight month of accelerating home prices. The March gain is the largest since December 2005 and is one of the largest in the index’s 30-year history. Prices are being pushed higher by incredibly strong competition in the market. High demand is butting up against near record-low supply, resulting in bidding wars for the vast majority of listings

The soaring lumber costs that have slowed construction of single-family homes are starting to pinch apartment-building developers too. While many multifamily buildings are made of steel, glass and concrete, wood is also a major component, especially in low- and mid-rise buildings. Wood is also used extensively for floors, cabinets and other fixtures.

National eviction ban remains in effect as government appeals ruling. Here’s what renters need to know.  Renters who are financially struggling because of the coronavirus pandemic got some scary news when a federal judge overturned the national eviction moratorium two months earlier than when it was scheduled to expire.In a 20-page ruling Wednesday, U.S. District Court Judge Dabney Friedrich, who was appointed in 2017 by former President Donald Trump, said the Centers for Disease Control and Prevention didn’t have the authority to stop landlords from evicting their tenants.But within hours, the Department of Justice said it would appeal and sought a stay of the decision, meaning the ban would remain in effect throughout the court battle.For now, the judge has granted a temporary stay, meaning renters can breathe a small sigh of relief.

Strong buyer demand is keeping homebuilders confident, but rising costs of construction materials are weighing on housing affordability.

Builder sentiment in the single-family housing market was unchanged at 83 in May, according to the NAHB/Wells Fargo Housing Market Index. Anything above 50 is considered positive sentiment.

The index had plummeted to 37 last May, as the pandemic lockdown hit and the housing market shut down. It then rebounded dramatically in June and July, as consumers rushed out to buy suburban homes, seeking more space for working and schooling from home.

Builders now say they continue to see a steady stream of buyers, due in large part to the extreme shortage of existing homes for sale. Continued low mortgage rates are helping some with affordability, but with prices rising fast, purchasing power is weakening.

Nationally, the median price of a single-family home sold in March, the most recent month available, was $334,500, up 18.4%, according to the National Association of Realtors. Colorado is tracking with the rest of the country for home price appreciation, but it started out at a higher point. Single-family home values, measured at the median sales price, are 50% higher than for the country overall, and showing no signs of backing down.

High lumber prices are driving up the price of new build homes.

Lumber futures hit $1,260 per thousand board feet on the Chicago Mercantile Exchange. If that sounds like a lot, well, it is—an all-time high.

Lumber prices have soared during the pandemic. Last April, that same order would've cost just $358.

If you think this doesn't affect you...you probably haven't been house hunting recently. Astronomical lumber prices have added $24,000 to the cost of a typical single-family home and $9,000 per apartment, according to the National Association of Home Builders.

What's going on?

1. The pandemic. At its outset, Covid forced many mills to temporarily close. When historically low mortgage rates met a summer wave of homebuying, renovations, and DIY-ing, producers were unprepared for the demand surge.

Lumber prices kept rising during the winter months, so homebuilders and lumber yards delayed their purchases, hoping prices would come down. Now, with the busy spring/summer building season ahead, homebuilders and lumber yards are rushing to get coveted boards, driving prices even higher.

2. The plague. Not the human one. Since the 1990s, warmer winters have caused mountain beetles to spread further across British Columbia, infecting more forests. Their arboreal appetites have diminished harvests.

Somewhat ironically, in Europe, a different beetle plague is also getting worse and forcing loggers to cut down infected trees before the wood becomes unusable. As the US looks for more supply, Europe has extra to export.

3. Labor. Mills could theoretically produce more...except some are facing labor shortages. While the job can include lots of Vitamin D and flannel, low pay and the difficult, sometimes dangerous work required has pinched manpower.

Bottom line: The number of homes for sale continues to sit near a record low. While that should be a dream for construction businesses, rising prices and tight inventories for lumber and other building materials have made it more expensive for builders and, in turn, created an affordability crisis for buyers.

March Savings Index: Percentage of Savers Drops for First Time in 2021, but Still Higher Than Start of Pandemic

Ready to spend? With a lower percentage of consumers stashing cash in March than the first two months of the year, the question of whether the end of the pandemic is in sight may be playing a role in how people are moving their money.

But perhaps the horrors of last March — cue empty toilet paper aisle flashbacks — and fear of the unknown still to come inspired better savings habits than March 2020.

More than 1,000 Americans are surveyed monthly for our Savings Index, and here’s what we learned this time around.

Key findings

• While many consumers await tax refunds and economic impact payments, fewer saved money in March than in the first two months of 2021. Thirty-six percent of Americans put money in their savings in March, down from 46% in February and 38% in January. But more are saving now compared with last March, when 31% increased their savings.
• About 1 in 3 Gen Zers pulled money from their savings in March, more than any other generation. Unsurprisingly, Gen Zers were also least likely to add money to savings, at 23%, compared with 34% of millennials, 35% of Gen Xers and 42% of baby boomers.
• Half of respondents with an income of $100,000 or more didn’t put any money in savings this month — with 6% of them saying they don’t have any money saved at all. While those consumers are significantly better off than those earning less than $35,000 (in that income bracket, 77% didn’t save money in March — 40% of whom have nothing saved), it’s still mystifying.
• Only 22% of consumers are actively saving for emergencies. To be fair, many respondents are tucking money away for general savings or other specific needs. But if 2020 taught us anything, having money set aside for the unpredictable is critical.
• With graduation on the horizon, 1 in 4 Gen Zers are saving for college — the top savings goal for that generation. The most common savings goal for millennials — when excluding general savings, retirement and emergencies — is a new house, while Gen Xers and baby boomers are focused on vacation.

Cash windfalls meet pandemic fatigue

This March brought many consumers some extra cash through another round of economic impact payments, as well as tax refunds. The extra dough could explain the bump in savings when compared with March 2020.

But March represented a drop-off point in savings compared with the previous month. In fact, 36% of Americans put money in their savings in March, down from 46% in February and 38% in January.

As many places around the U.S. reopen and the vaccine rollout makes consumers more comfortable about leisure activities, it’s possible that spending in categories from dining to travel to shopping are replacing extra savings.

On the other hand, our index to this point has found a “stimulus effect” on savings based on the economic impact payments.

For example, after the first round of payments in April 2020, personal savings rates among consumers jumped to 42% in May. When the second round of payments were distributed in late December and early January, the percentage of consumers saving money hit 46% in February. So stay tuned to see what happens in April.

Gen Z eyes the future, but lives in the now

Though 1 in 4 Gen Zers are saving for college, the young generation also had the most consumers pulling from their savings, with nearly 1 in 3 making withdrawals in March.

Additionally, Gen Z trailed its older peers when adding to their savings accounts, with only 23% from the generation contributing to savings, compared with:

• 34% of millennials
• 35% of Gen Xers
• 42% of baby boomers

While a number of factors might explain the disparity, it’s possible Gen Zers are finding different outlets for their extra cash, such as investing in stocks. A recent MagnifyMoney study found younger Americans were more likely to put their money in the stock market rather than in savings bonds and certificates of deposit (CDs).

And though it’s possible to see better returns on your stock portfolio than with a high-yield savings account — especially in today’s low-rate environment — it’s still advisable to keep an easily accessible emergency fund, though only 22% of consumers are saving explicitly for this purpose.

Millennials want a house, while baby boomers want a housesitter

Beyond general savings, emergency savings and retirement, saving for a house topped the list for millennials, while vacation was the top choice for Gen Xers and baby boomers.

Whether you’re saving for a post-pandemic splurge or looking further ahead into the future, where you put your money right now can make all the difference. Stashing cash in envelopes can help you build a safety net, but you’ll save faster and more efficiently if your money is growing passively in a high-yield savings account.

More: Check out our latest list of the best savings accounts

Methodology

Every month, MagnifyMoney surveys consumers to find out whether they added money to their savings — and what they’re saving for. The results comprise our monthly Savings Index, which began in October 2019.

For the March 2021 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,040 American consumers, with the sample base proportioned to represent the overall population. The survey was fielded on March 17-22, 2021.

We defined generations as the following ages in 2021:

• Generation Z: 18 to 24
• Millennial: 25 to 40
• Generation X: 41 to 55
• Baby boomer: 56 to 75

While the survey also included consumers from the silent generation (defined as those 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.

Buoyed by strong employment and population growth over the past decade, Denver is among a handful of non-coastal U.S. cities that rank as the most attractive destinations for investors, according to a recent report published by JLL Capital Markets.

Denver was one of eight “rising star” cities or "growth cities" identified by JLL (NYSE: JLL). The cities are becoming increasingly appealing for investment opportunities and are competing with larger "gateway markets" such as Los Angeles, New York City or San Francisco, for those dollars.

The other cities on the “rising star” list are Austin, Atlanta, Charlotte, Dallas, Miami, Nashville and Raleigh.

The line between gateway cities and growth markets such as Denver is likely to become more blurred in the near future. JLL’s study added gateways such as New York City or San Francisco will remain a magnet for residents and companies, but they will have greater competition from previously non-traditional markets — Denver included.

Denver has seen more than 25% employment growth since 2010, with a 17% increase in population during that same time. Many experts believe that the city's active lifestyle and central location will continue to draw employers and workers considering relocations.

Even during the pandemic, Denver has proven its ability to attract major corporate office users such as Palantir, Healthpeak Properties Inc. and LogistiCare Solutions LLC.

“The city is ranked in the top five U.S. markets for job recovery and continues to benefit from West Coast spillover and gains in aerospace, engineering and contracting,” said Jordan Robbins, a senior managing director with the Denver office of JLL Capital Markets.

Peter Merrion, a senior director with JLL Capital Markets in Denver, said he's been encouraged by a strong start to office investment activity in 2021 compared to the "notable depression in sales volume and activity" in 2020.

"What we're finding — and I think this is a theme that's being echoed across product types — is that Denver is graduating in terms of its market status," Merrion said.

Three months into the year, he said, office occupiers and investors appear to be "far more positive and far more bullish." Collections on office, multifamily and industrial properties have performed better during the pandemic than many initially thought, Merrion said.

"On the office side, and the multifamily side and the industrial side, companies saw far less of an impact to their bottom lines in 2020 than many thought," Merrion said. "That's not to belittle the very real pain that a lot of people did go through, but for the most part, the pandemic was a shorter headwind, economically, than a lot of people were thinking."

Still, some of Denver's office market fundamentals, such as a rise in sublease space that's been acute in the Central Business District, are prompting concern from investors, Merrion said. The result has been increased interest in suburban submarkets such as the Denver Tech Center or Interlocken.

Many investors also want to see increased returns to the office from employers before making big decisions, which could mean it will take longer for Denver's office investment market to recover to pre-Covid levels of activity, Merrion said.

JLL isn't the only one pegging Denver as a city poised to emerge from the pandemic in a position of relative strength.

Results of an investor survey released by CBRE Group Inc. last month found that Denver ranked third out of five Sun Belt cities where investors are likely looking to park their money. Austin and Dallas ranked ahead of Denver, while Atlanta and Phoenix rounded out the top five.

“Sun Belt markets garnered strong interest, particularly those with favorable job and population growth prospects and, in most cases, higher yields,” the CBRE report stated. “For the first time in the survey’s seven-year history, large investors (those with assets under management of more than $50 billion) are more enthusiastic about secondary markets than primary markets.”

The past year has been the hottest for sales activity in 14 years. Home values are rising in practically every corner of the U.S., and median sale prices in dozens of metro areas have posted double-digit percentage increases from a year ago, according to Zillow Group Inc. In Boise, Idaho, the median sale price rose almost 25% in January from a year earlier, while in Stamford, Conn., it rose 19%.