Has America's homeownership rate bottomed out? In the third quarter, the homeownership rate ticked up slightly, to 63.7 percent from 63.4 percent the previous quarter. It's still near its lowest point in 30 years, but it appears to have plateaued, and many economists think it may not go much lower.
The number of homeowner households increased by 123,000 in the third quarter from a year earlier. At the same time, the number of renter households increased by 1.3 million.
The latter figure may be holding back the rate of homeownership. Home prices are rising faster than incomes, forcing many would be homeowners to continue renting. And there's plenty of supply: The vacancy rate for rental housing rose to 7.3 percent from 6.8 percent in the second quarter.
Friday, October 30, 2015
Thursday, October 29, 2015
GDP Hits a Bump
The economy slowed down in the third quarter, growing at just 1.5 percent, according to figures released this morning by the Commerce Department. That was a disappointing figure, following the 3.9 percent growth the economy posted in the second quarter.
The biggest cuplrit was shrinking inventories. Commerce said the decline in private inventories was responsible for shaving 1.44 percent off the overall 1.5 percent growth rate. The good news is, those types of changes are generally transitory and don't carry over quarter to quarter.
Consumer spending was down slightly in the third quarter, dropping to 3.2 percent from 3.6 percent the previous quarter. But durable goods spending—long-lasting items such as washing machines and automobiles—continued to be strong, rising 6.7 percent.
The biggest cuplrit was shrinking inventories. Commerce said the decline in private inventories was responsible for shaving 1.44 percent off the overall 1.5 percent growth rate. The good news is, those types of changes are generally transitory and don't carry over quarter to quarter.
Consumer spending was down slightly in the third quarter, dropping to 3.2 percent from 3.6 percent the previous quarter. But durable goods spending—long-lasting items such as washing machines and automobiles—continued to be strong, rising 6.7 percent.
Wednesday, October 28, 2015
Big Apple
The big news on Wall Street yesterday was the quarterly earnings report from Apple, and it did not disappoint. Apple said that its quarterly profit rose 31 percent, with fourth-quarter net income totaling $11.12 billion, up from $8.47 billion in the year-ago period. Revenue increased to $51.50 billion, up 22 percent from a year earlier.
The iPhone remains the key to Apple’s earnings, accounting for nearly 63 percent of the company's revenue in the quarter. For the quarter, Apple sold 48 million iPhones, outpacing sales of 39 million units a year earlier, with sales to China being a key driver.
Apple didn't disclose sales for its new Apple Watch, including those sales with the iPod, Apple TV and Beats accessories in its “other products” category. Sales of that segment rose 61 percent to $3.04 billion. The one downside: Sales of the iPad continued to slump, falling for a seventh straight quarter.
The iPhone remains the key to Apple’s earnings, accounting for nearly 63 percent of the company's revenue in the quarter. For the quarter, Apple sold 48 million iPhones, outpacing sales of 39 million units a year earlier, with sales to China being a key driver.
Apple didn't disclose sales for its new Apple Watch, including those sales with the iPod, Apple TV and Beats accessories in its “other products” category. Sales of that segment rose 61 percent to $3.04 billion. The one downside: Sales of the iPad continued to slump, falling for a seventh straight quarter.
Tuesday, October 27, 2015
A Shortfall in Retirement
As baby boomers increasingly approach retirement, they're facing a huge shortfall in income, according to a new survey from BlackRock on attitudes about money and financial goals. People ages 55 to 64 who responded to the survey said they expected to have about $45,000 in annual income in retirement. But given the amounts they had actually saved, they would only provide an estimated annual income of $9,129.
Fewer than a quarter of these baby boomers regularly set aside money into long-term savings or investment plans. But they think they're ready. Nearly three quarters of the respondents said they feel financially secure and “prepared to pursue their dreams.”
Even affluent retirees—those earning more than $250,000 a year—hadn’t set aside enough to generate the income they said they needed to meet their retirement expectations. They need close to $60,000 per year to maintain their lfestyle, but have only saved enough to generate less than $40,000 per year.
Fewer than a quarter of these baby boomers regularly set aside money into long-term savings or investment plans. But they think they're ready. Nearly three quarters of the respondents said they feel financially secure and “prepared to pursue their dreams.”
Even affluent retirees—those earning more than $250,000 a year—hadn’t set aside enough to generate the income they said they needed to meet their retirement expectations. They need close to $60,000 per year to maintain their lfestyle, but have only saved enough to generate less than $40,000 per year.
Monday, October 26, 2015
Hard Times for Hedge Funds
Wth the stock markets and mutual funds having such an unimpressive year, you might think that investors would be flocking to hedge funds. But the opposite has been true. According to Hedge Fund Research, hedge fund assets actually fell in the third quarter this year.
Assets held in hedge funds dropped 3 percent in the third quarter, down 3 percent over that time, to a total of $2.87 trillion. That's the first quarterly drop in three years, and the biggest quarterly drop in six years, since the recession.
It wasn't really a case of investors withdrawing money from these funds. Investor deposits saw a net increase over that time, but because of the turmoil in the markets, hedge funds overall lost enough money to create the overall decline.
Assets held in hedge funds dropped 3 percent in the third quarter, down 3 percent over that time, to a total of $2.87 trillion. That's the first quarterly drop in three years, and the biggest quarterly drop in six years, since the recession.
It wasn't really a case of investors withdrawing money from these funds. Investor deposits saw a net increase over that time, but because of the turmoil in the markets, hedge funds overall lost enough money to create the overall decline.
Friday, October 23, 2015
Earnings Fuel a Big Bounce for the S&P
Positive earnings reports helped the S&P 500 finish at its highest close in two months yesterday. Reports from some tech giants buoyed the entire market, which finished up 1.7 percent on the day.
Alphabet Inc., the new name of Google's parent company, handily beat the Street's earnings estimates, on the way to boosting its share price by 12 percent. Similarly, better-than-expected earnings lifted Amazon shares by 10 percent. For the moment at least, Amazon’s stock was at a record high.
But it wasn't quite enough to lift the S&P out of correction territory. The S&P 500 fell 12.3 percent from its May and all-time high to its low in August. For the correction to end, it needed to finish above 2054, but it fell just short at 2052.
Alphabet Inc., the new name of Google's parent company, handily beat the Street's earnings estimates, on the way to boosting its share price by 12 percent. Similarly, better-than-expected earnings lifted Amazon shares by 10 percent. For the moment at least, Amazon’s stock was at a record high.
But it wasn't quite enough to lift the S&P out of correction territory. The S&P 500 fell 12.3 percent from its May and all-time high to its low in August. For the correction to end, it needed to finish above 2054, but it fell just short at 2052.
Thursday, October 22, 2015
Learning About LTC
Long-term care planning is topic that many investors prefer to avoid, according to a new survey from Lincoln Financial. The upshot is that very few people have talked to their financial advisors about whether long-term-care insurance is the right choice for them.
The survey found that only about 20 percent of consumers have discussed long-term care with a financial professional. Just 17 percent of those consumers ended up buying an LTC insurance policy. LTC insurance isn't an optimal solution for everyone, depending on your overall financial situation, but it's a topic that everyone needs to carefully consider.
Interestingly enough, the survey found that consumers are more likely to recognize that need in a family member’s future rather than in their own. A third of the respondents said it was likely that a family member would need long-term care in the future, compared with 22 percent who said they would need it for themselves.
The survey found that only about 20 percent of consumers have discussed long-term care with a financial professional. Just 17 percent of those consumers ended up buying an LTC insurance policy. LTC insurance isn't an optimal solution for everyone, depending on your overall financial situation, but it's a topic that everyone needs to carefully consider.
Interestingly enough, the survey found that consumers are more likely to recognize that need in a family member’s future rather than in their own. A third of the respondents said it was likely that a family member would need long-term care in the future, compared with 22 percent who said they would need it for themselves.
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