The Sloane Report by Jonathan Sloane
Fleeing New York…According to data just released from the U.S. Internal Revenue Service, more Americans are leaving New York than any other state, and more Americans are moving to Texas than any other state. The recently released 2012-2013 IRIS migration data highlighted that Texas was by far the state that saw the most migration inflow during the period, receiving more than twice as many new residents as the second place state Florida (based on tax returns filed).
We have become a nation of renters. Where between 1985 and 2000, renters spent an average of 24.2% of their income on rent, they now spend 33% of gross income…equal to the qualification of owning a home and making renters unable to save for a down payment. San Jose, CA leads the country with 41.5% of median annual income of $97,720 applied to a median monthly rent of $3,376 rent (CNN/WSJ).
Fish consumption is growing at a faster pace than beef, pork and poultry, driven by an expanding, increasingly prosperous global population that recognizes the health benefits of eating seafood. Demand is forecast by the United Nations to outstrip supply in coming years. Wild fish aren’t going to fill the gap, and that leaves farming in lakes and coastal waters – also known as aquaculture – to make up the shortfall (Bloomberg).
Guardian (generally relating to housing, health and well-being) and Conservator (generally relating to financial matters) appointments have grown significantly with the aging of the population. Often the responsibilities are split between family and non-family, respectively, to ensure independent accountability and proper planning. Where a Trust (for Special Needs situations or for asset protection) has been established, the independent Trust Protector position is used to ensure the wishes and well-being of the beneficiary and/or grantor are executed consistently by the trustee(s).
2015 Operation Enduring Freedom casualties increased to 7, bringing the total of US casualties in Afghanistan to 2,363 since 2001 (icasualties.org). To their families, Thank you.
UNEMPLOYMENT: The US Labor Department Bureau of Labor Statistics reported the US Unemployment Rate dropped to 5.1% in July. The Massachusetts Office of Labor and Workforce Development reported that the Commonwealth holds steady at 4.7% and Boston is at 3.7%.
HOUSING: The 30 year average Fixed Rate Mortgage declined to 3.95%, down from 4.05% at last publication (Freddie Mac).
In July, construction spending ticked up 0.7%, topping against expectations for a 0.6% increase. Over the prior year spending was up 13.7%. Residential construction spending, which accounts for about one-third of construction spending, rose 1.1% in July compared to the prior month. Against July 2014, residential construction spending rose 15.8% (Business Insider/Commerce Department).
The National Association of Realtors reported that total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. Sales in July remained at the highest pace since February 2007 (5.79 million), have now increased year-over-year for ten consecutive months and are 10.3 percent above a year ago (5.07 million). The tight inventory and tight underwriting guidelines are keeping growth consistent.
The median existing-home price for all housing types in July was $234,000, which is 5.6 percent above July 2014. July’s price increase marks the 41st consecutive month of year-over-year gains.
Total housing inventory at the end of July declined 0.4 percent to 2.24 million existing homes available for sale, and is now 4.7 percent lower than a year ago (2.35 million). Unsold inventory is at a 4.8-month supply at the current sales pace, down from 4.9 months in June.
The percent share of first-time buyers declined in July for the second consecutive month, falling from 30 percent in June to 28 percent — the lowest share since January of this year (also 28 percent). A year ago, first-time buyers represented 29 percent of all buyers.
Properties typically stayed on the market for 42 days in July, an increase from June (34 days) but below the 48 days in July 2014. Short sales were on the market the longest at a median of 135 days in July, while foreclosures sold in 49 days and non-distressed homes took 41 days. Forty-three percent of homes sold in July were on the market for less than a month.
July existing-home sales in the Northeast decreased 2.8 percent to an annual rate of 700,000, but are still 9.4 percent above a year ago. The median price in the Northeast was $277,200, which is 1.3 percent higher than July 2014. In the Midwest, existing-home sales were at an annual rate of 1.32 million in July, unchanged from June and 10.9 percent above July 2014. The median price in the Midwest was $186,500, up 6.6 percent from a year ago.
Existing-home sales in the South increased 4.1 percent to an annual rate of 2.29 million in July, and are 9.6 percent above July 2014. The median price in the South was $203,500, up 7.0 percent from a year ago.
Existing-home sales in the West rose 3.2 percent to an annual rate of 1.28 million in July, and are 11.3 percent above a year ago. The median price in the West was $327,400, which is 8.4 percent above July 2014 (NAR/FRED).
MARKETS: Corporate earnings have been partially fueled by share repurchase plans. The abundance of oil is keeping gas prices and inflation low. Concern over the lackluster economy has caused the recent sell-offs…a modest correction with the expectation of a flat market until next year. The markets are ready for the Fed’s direction on rates, but the weak world economy, lack of consumer wage growth and resulting weak ability to spend, and modest housing growth will restrict the US economy for the near-term.
INTERNATIONAL: Greece is into their third bailout, some $95 billion…only time will tell…
Brazil’s budget deficit has created economic chaos and significant instability; the country’s debt is now at “junk” pricing levels.
China’s slowdown is real. The devaluation of currency is a move to keep China’s exports cheap with expectation that growth will drop to 7%.
THE FED: Fed-watch is on-going with an eye to any indication of a rate increase. We still anticipate a modest rate movement in Q4.
Freedom Trust Company of America
175 Federal Street
Boston, MA 02110
Frederick Bush Jonathan G. Sloane
About Jonathan Sloane:
After graduating Tufts University (BA Economics ’80 – Medford, MA), Mr. Sloane joined Century Bank, and was named President of its subsidiary, The Bank of Massachusetts (later re-branded, Century Bank/Suffolk), upon its acquisition in January, 1983. With the removal of the restrictive Massachusetts County banking limitations, the two subsidiary banks were merged into Century Bank and Trust Company in 1992, and Mr. Sloane was appointed President of the then $560M institution in 1996.
Mr. Sloane retired from the vibrant and highly profitable $3B company in 2010. He is recognized for his leadership in creating a highly-energized and stable management Team; significant expansion of the Bank’s loan portfolio; early adoption and innovation of company-wide Risk Management strategies; development of corporate, institutional and municipal cash management products; and early adoption of successful fee-based revenue streams; development of an enviable sales culture; and a commitment to corporate philanthropy.
After retiring from Century Bank, Mr. Sloane formed Sloane Partners, a strategic consulting firm focused on business improvement, succession, and exit execution; and recently joined Freedom Trust Company of America, a fiduciary advisory firm where he is the Director of Family Office Services.
Mr. Sloane has an impressive record of community service with leadership positions on public charitable Boards, including, Catholic Charities of Boston, the YMCAs of Greater Boston, Boy Scouts of America (Boston Minuteman Council, and the Northeast Region), New England Province of Jesuits, ADL, Tufts University Board of Overseers, and the New England Baptist Hospital.