This week, a report from Fannie Mae suggests the housing market is losing momentum due to declines in single family construction spending and the prospect of higher interest rates in the future. Whether or not this should be troubling is a matter of perspective.
It is true that certain construction metrics have been lagging. In a separate report this week, housing starts fell sharply to their lowest levels in more than a year.
In and of itself, this drop in Housing Starts could be troubling, but by the time we look at the week’s other data, the situation doesn’t seem so dire.
Right off the bat, it’s important to remember that any monthly economic data is inherently volatile. One rogue month of weakness in Housing Starts (down 9.0%) doesn’t speak to a shift in the bigger picture. A stronger case could be made if the other housing-related data was similarly weak, but if anything, this week’s data argues the opposite.
In the same report as Housing Starts, Building Permits told a completely different story, rising 6.3% from last month and 8.5% from last year. Builder Confidence fell, but remained at the 2nd highest level of the year.
Existing home sales were unabashedly strong, not to mention first-time buyer participation at a 4-year high, and a 5.6% annual improvement in prices. The following chart shows how several of these metrics have evolved (in terms of percent change) from “peak housing data” in June 2005.
Clearly, the housing market is not “in trouble” at the moment. Waning momentum, on the other hand, is a possibility we have to consider.
The waning momentum thesis relies, in part, on the expectation of higher rates. Fannie, and others, are worried that rates could now be at greater risk of a long-term uptrend as global central banks begin unwinding their easy money policies.
This fear is quite valid. Indeed, rates are only as low as they are due to global central bank monetary policy. Naturally, if the European Central Bank (ECB) announced its intention to taper asset purchases as the Fed did in 2013, a similar taper tantrum could be the result.
Markets have been concerned enough about another taper tantrum that rates have been moving steadily higher in anticipation. Whether or not they’re “high” on an outright basis, is a matter of perspective. After all, they’ve only been this low for this long one other time in history. (The following chart uses 10yr Treasury yields as proxy for movement in longer-term rates like mortgages.)
The preceding chart is bittersweet. It’s great that rates have been so low, but it also serves as a reminder of just how quickly they can move higher. Keep in mind that almost no one expected mortgage rates in the 3% range again the 2013 taper tantrum, yet here we are.
If the ECB does indeed cause a similar tantrum things could get scary in the same way they were scary in 2013. But at that point, the global economy would need to be firing on most of its cylinders in order to keep rates heading higher. Otherwise, there’s no reason to believe the life-expectancy of a new taper tantrum would be better than the old one.
$805.65. That’s the average amount consumers will spend celebrating Christmas, Hanukkah and/or Kwanzaa this year according to the National Retail Federation’s Holiday Consumer Spending Survey. Whether you spend more or less, the holiday season is right around the corner! Here are some of the best ways to save and make sure you and your wallet are prepared for the holidays.
Set a budget and check it twice.
Budgeting for the holidays can help you save money, reduce stress, and have a more enjoyable holiday season.
One way to start is to figure out what you want to spend. This will give you a clear idea of how much to save.
Another way to budget is to create list of the people you buy gifts for and then set a price point for each person. Total this up for your savings goal. Then use the list to keep track of spending so you don’t blow your budget.
Don’t rip into your savings for wrapping supplies.
Avoid unnecessary spending on wrapping supplies you already have. Many of us have bags, wrapping paper, boxes, etc. left over from last season. Check what’s on hand so you can free up space in your budget as well as your home.
Don’t wait to start shopping. Keep a keen eye out for gifts for family and friends on your list all year round. You might find the perfect gifts at a craft show, antique market, or boutique when you’re not looking for something specific.
Be sure to keep track of your purchases and keep them in a specific place (maybe hidden if need be).
Brave Black Friday
Black Friday and Cyber Monday can be a big time to score great deals on very specific gifts – if you’re willing to brave the crazy crowds also looking for the steal of the season. If you opt for shopping these days, get a game plan together:
- What gift are you looking for?
- What stores have this item?
- What times are the prices lowest?
Having a plan of attack can help you save the most and avoid becoming overwhelmed.
Are you good at art? Can you craft? For many family members and friends a handcrafted gift means more than something store-bought. Maybe you have skills for making home or car repairs; offer your skill set as a gift. You may be surprised how grateful people are for your help and expertise.
Get Started Ahead of Time
The best way to make sure you have enough for your holidays is to plan early. The sooner you start budgeting and saving the more you can accomplish! You may even find yourself with a surplus you could use to treat yourself or roll into next year.
Consumers offers a special “Christmas Savings” account that helps members make the most of their holiday savings. Log into Online Banking and click Additional Services, then click Open Savings Account. It’s that easy. Of course, you can always stop in at one of our offices, call us at 800.991.2221 or start your Christmas Savings account online today.
For many kids, back-to-school shopping may be the best part of heading back to class. But if you’re the one footing the bill, costs can really rack up fast when you consider the list of school supplies needed in addition to new shoes, clothes, and electronics.
According to survey results from the National Retail Federation, families with children in grades K-12 will spend an average $673.57 on back-to-school goods. Here are three great savings tips to keep in mind when you’re out shopping:
- Stick to the plan—or list. What? A Justin Bieber pencil and folder set isn’t required for fifth graders? Then maybe it shouldn’t be on your list either. Making a plan of what your child really needs and where to get it is key to staying within your shopping budget.
- Shop the sales. Be sure to check out the weekly store circulars for the best deals on supplies and clothes—or rebates for electronics. Many stores will offer special coupons to those who follow them on Facebook or Twitter. Consignment stores may also be a good option for clothing—especially for younger kids who grow through sizes quickly.
- Buy in bulk—and save for later. Glue sticks, pencils, Kleenex and a lot of other supplies can be purchased in bulk and shared between multiple kids or saved for later on. Consolidate lists (see tip #1) to see where you can combine savings.
If all this shopping stuff still has your head spinning, one stress-free investment you can make in your child’s future is setting them up with a Consumers youth savings account. All it takes is an initial deposit of $5.00 to get started.
- Kids 12 and under: Accounts focus on teaching students about deposits and the importance of saving. After the account is opened, the child will get his or her choice of piggy bank.
- Teens ages 13-17: Accounts focus on helping students learn to manage their money with online and mobile tools. With parent/guardian permission, students 15+ qualify for a debit card and access to online/mobile banking.
Wherever your back to school shopping takes you (hopefully including a stop into one of our local offices), breathe easy—you can do this! (Just don’t forget to buy the shoes with non-marking soles.)
Federally insured by NCUA
This will probably come as no surprise to you, but college is expensive. The latest Consumers infographic just scratches the surface of higher education costs here in Michigan—not to mention what students will additionally pay for entertainment, transportation or the laundromat.
This is your chance though, as a parent, to coach your college student on how to properly manage their finances, set budgets and find savings where they can. Choosing the right financial institution to help facilitate your student’s cash flow is important, too.
At Consumers, students can open a Simple Checking account. There are no minimum balance requirements or monthly fees when you opt for eStatements. And your student will be able access more than 30,000 fee-free ATMs within the CO-OP network.
For those heading out of the area (or even studying abroad), Consumers service and technology travels with them. Members always have 24/7 access to their account with Online Banking, Voice Access and mobile banking options. Through our Consumers mobile app, they can easily check balances, pay bills, deposit checks, and receive money transfers in case of emergencies.
For more about our Simple Checking account features, click here.
Federally insured by NCUA
The decision making-process when deciding between renting and buying can seem fraught with possible land mines and trip-wires. There are hundreds of rent and mortgage calculators out there to try and help you navigate the battlefield. To try and help you make the best decision for you and your family let’s take a look at a few “intangible” things that may not be included in those calculators.
Fluctuating rent costs
Michigan has seen pretty steady economic growth over that last few years, while cost of living stays relatively stable. But if you want to live in a growing, popular area you may have to face aggravating rent increases whenever you renew your lease. Grand Rapids rental rates have increased an average $500 in four years, over $100 a year. A mortgage may seem daunting, but at least you can be guaranteed a fixed cost year to year. In fact, Grand Rapids ranked third in the nation in 2015 for economic growth and stability, along side cities like Denver and Houston. But home prices have stayed relatively steady, increasing only seven percent since 2014, rather than the 12 percent increase seen for a one-bedroom rental in 2015. Kalamazoo’s rental and housing markets are more stable, rental costs have only increased two percent in three years, while home values grew about six percent last year.
Bad at Saving? A mortgage might force your hand
It can seem like a stretch, but try and think of paying off debt as increasing your savings. Imagine you purchase your dream home at 35 with a 30 year mortgage. Come your 65th birthday and you’re ready to retire, now you’re looking at payment-free housing (excusing insurance and taxes). Or you can sell and enter your golden years with a nice pile of cash. You can achieve the same thing if you’re diligent about saving every month in addition to paying your rent and expenses, but savings accounts aren’t protected and locked up in physical assets. So the question to ask yourself is if you can keep your hand out of the cookie jar for the next 30 years?
So maybe instead of a mortgage or a savings account you want to protect your future with investments. The return on stock market investments is greater than a mortgage, but the gains are taxable in ways mortgage interest and home sale profits are not. The first $250,000 in profit from the sale of a home is tax-free. That amount doubles to $500,000 if you sell as a married couple.
So far this all seems to be a pretty ringing endorsement for home-buying right? Well, here’s a positive mark for renting: sudden maintenance costs. Your rental rate will have maintenance costs built in by your landlord, so if your refrigerator dies neither of you will be in a financial lurch to pay for the replacement. However, mortgages do not account for the unpredictability of maintenance costs. There are some protections like home-owners insurance and a home warranties, but there are limitations to these kind of protections. A good rule of thumb is to be prepared to handle a sudden $1,500 to $2,000 repair or replacement on very short notice.
The decision to rent or buy your home can be a tough, personal decision with many factors to take into consideration. While there are numerous calculators (and blog posts) that offer guidance on the process, it can be very beneficial to talk with a financial professional. Our team at Consumers will always try to help you make the strongest financial decision for you.
Are you ever in the check out line at the store and you’re next and suddenly your wondering if you have enough in you checking account to cover your purchases? You don’t want to hold up the line by logging into your Online Banking, so what do you do? Consumers’ Online Banking Mobile App now has a fast feature for checking your balances without logging in, called Quick Balance.
Quick Balance allows you to know your balance without the hassle of having to login to your Online Banking Profile. Once set up, simply swipe down. Setting up this feature is super easy. Click here to learn how.
In a bold move, Google recently announced, “We’re banning ads for payday loans and some related products from our ads systems,” effective July 13, 2016. This powerful policy move highlights the availability of personal loan options that are better for consumers’ financial health.
Borrowing money can be a positive event that improves the quality of the borrower’s life. However, borrowers often feel trapped into using products like payday loans for emergency situations, not realizing they have other options. When the family car breaks down, people focus more on getting it fixed immediately than on learning how to borrow.
Consumers employees are passionate about educating members of their lending alternatives and providing access to free financial tools. Take time today to meet with us at your local office – before your next emergency. Then when you do need a loan you’ll have an option that supports your financial health.
Post by: Tim Kosak, Consumers Credit Union
According Jeff Visser, Consumers’ Chief Sales Officer, “There’s never been a better time to switch banks. ClickSWITCH enables us to take a member’s direct deposits and automatic payment accounts from another institution and switch them to Consumers in less than 10 minutes. It’s fast, convenient, free and secure.”
ClickSWITCH is a personalized service that takes all of the work out of switching your direct deposit and automatic payment accounts from one institution to another. With ClickSWITCH:
- You no longer have to fill out multiple forms or waste time contacting payees for automated payments.
- Your account information is transferred instantly, insuring a smooth and speedy transition to your new account.
- The process is fully automated, secure and convenient.
“We are pleased to offer ClickSWITCH to our members, “ said Visser. “It’s really very easy for Consumers Credit Union to help folks switch over all their accounts. All you need is your account number for each biller and Consumers will do the rest.”
Come into an office or call us on the phone, and we will be happy to take your information and move everything over in a matter of minutes. Now switching financial institutions is a breeze!