Morning Report – Rental Vacancies Rising 10/2/14

Posted on October 2, 2014 by Brent Nyitray

Markets are flat as ECB President Mario Draghi speaks. Bonds and MBS are lower.

Initial Jobless Claims fell to 287k, as we continue to have boom – time levels in the first time unemployed. Separately, announced job cuts fell by 24% according to outplacement firm Challenger, Gray, and Christmas. Employers are beginning to hang onto their employees – the big question is what happens next? Do they get start bidding up for talent (i.e. increasing wages) or do they start to tap the long-term unemployed? The answer to that question will determine the Fed’s posture going forward.

Auto sales were strong in September. The average age of a car in the US is something like 11.4 years, which is a record.

The ISM New York rose from 57.1 to 63.7

Hiring has slowed, however. Small businesses are hiring at a slower pace than over the summer.

Completed foreclosures increased to 45,000 in August, according to Corelogic.They are up 1.1% compared to July, but down 22% year-over-year. The national foreclosure inventory is down 33% YOY, to 1.6% of mortgaged homes.

All of the new multi-fam construction and REO-to-rental supply has finally caught up to the market. The vacancy rate for apartments rose to 4.2% in the third quarter, the first increase since 2009. Apartment developers are going to complete the most units this year since 1999. The divergence between multi-fam and SFR is striking. The punch line is that some of these professional investors are going to start to think about letting some supply go, which should finally give the first time homebuyer a chance to get in, which is good for the economy and also the mortgage banking business.

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