Investor Intel: Stocks Plunge, Housing Surges
Global markets are once again on their rollercoaster ride thanks to concerns over slowing economic growth in China and devaluation of the Chinese yuan. On Thursday, the Standard & Poor’s 500 Index capped its worst-ever start to a year, while oil dropped to its lowest level in 12 years, sinking almost to $30 a barrel. Meanwhile, the world’s most valuable company, Apple Inc., saw its share price slip to under $100 amid concerns that demand is waning for iPhones.
It seems the only thing that hasn’t gone down are housing prices, and rents.
Home prices nationwide, including distressed sales, surged 6.3 percent in November 2015 compared with November 2014, according to the latest report from CoreLogic. Home prices are expected to rise a further 3 percent over the course of 2016.
Similarly, rents on three-bedroom properties are expected to rise 3.5 percent in 2016, according to a recent report from RealtyTrac.
The report found markets with the biggest increase in rents in 2015 are counties in Sumter, S.C.; Burlington, N.C.; and Goldsboro, N.C. Among counties with a population of at least 1 million, those with the biggest increase in rents are Santa Clara County, Calif. in the San Jose metro area (up 9.3 percent); Travis County, Texas in the Austin metro area (8 percent); and San Diego County, Calif. (7.5 percent).
The U.S. economy—save the energy and manufacturing sectors—is showing signs of strength going into the New Year. Nonfarm payrolls surged 292,000 during December, according to a Bureau of Labor Statistics report released today, adding to gains made in the previous two months. The unemployment rate stayed steady at 5 percent. For all of 2015, payrolls climbed by 2.65 million after a gain of 3.1 million in 2014, making these two years the best for hiring since 1998-99.
Hourly earnings, however, remain unchanged from the month prior, bringing 2015’s total wage increase to 2.5 percent (forecasts called for 2.7 percent).
Growth in employment, income gains, low commodity prices and a strong housing market (and perhaps the glow of the holidays) apparently have people feeling warm and fuzzy. The Bloomberg Consumer Comfort Index rose to a 12-week high in the week ended Jan. 3, while the latest index from the University of Michigan also showed sentiment rose to a five-month high in December.
While the outlook for equities in 2016 is more volatility, housing is expected to be stable and profitable. Mark Zandi, chief economist at Moody’s Analytics, said it best in yesterday’s Washington Post, “To sum up, homeowners, landlords and taxpayers should have a good 2016.”
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