Zoning Changes – Arlington is among the growing number of places joining the debate to end single-family-zoning. Oregon, California, Maine, and a handful of cities have already opened their zoning laws which experts say is the key to ending the housing shortage. This shortage of homes/lack of supply continues to be a strong driver for the increase of home prices. Recent analysis by the Terner Center shows that ‘missing middle’ zoning laws, while useful and do result in increased housing, aren’t likely to ‘yield meaningful amounts of new housing without parallel policy changes.’ Portland is cited as an example of ‘making additional changes beyond zoning that have helped the city permit dozens of fourplexes.’ As with most policy changes it will be some time before we see the impact.
Mortgage Rates increased this week as the price of Mortgaged Backed Securities (MBS) declined sharply. Rates are up 2.75% from this time last year.
CEO Confidence –The CEO Confidence survey which is comprised of 142 CEOs showed that CEOs remain cautious of the economy in 2023. The Index came in at 43 which is up from 32 in Q4 of 2022, but below 50 which means there were more negative responses than positive. While over 90% of CEO’s anticipate a recession next year the vast majority assume it will brief and shallow. 37% of CEO’s expect to expand their workforce over the next 12 months. 50% are reducing hiring plans or implementing hiring freezes.
Home Values declined by 0.4% in December but remain up 6.9% from December of 2021. Core Logic anticipates a 3% increase over the next 12 months.
Future Home Values the Q4 Home Price Expectations Survey (by Zillow and Pulsenomics) asked 150 top economists in the US where they thought home prices would be in the future. On average experts expect 23% appreciation over the next 5 years. That means a $500,000 home is expected to gain $115,000 in value over the next 5 years.
Mortgage Applications to purchase homes increased 3.1% last week and are down 37% year over year. Refinance applications jumped 18% last week and are down 75% year over year.