Morning Briefing: UCLA report says economy can withstand interest rate rise, housing to grow

by Steve Randall28 Sep 2015
UCLA report says economy can withstand interest rate rise, housing to grow
With the Fed’s Janet Yellen still talking of an interest rate rise by the end of the year the UCLA’s Anderson School of Management concludes that the economy can withstand the rise. The forecast for the national economy for the next two years is a healthy one, a slim chance of a recession and a slight chance of a surge in growth.

In a companion report to the quarterly economic study, chief economist David Shulman says that after a long, difficult period, housing starts are poised to approach the long-term average (1959-2014) of just under 1.5 million units in 2016. The housing forecast calls for starts of 1.14 million units this year, 1.42 and 1.44 million units in 2016 and 2017, respectively.

Prices and existing home sales will continue to rise, despite higher interest rates in the forecast. The high rental increases are being sustained by very low rental apartment vacancy rates. In fact, Shulman says, we are seeing a trend of investors purchasing new single-family houses for the rental market. However, affordability has become a real issue with the 46 per cent of renters paying more than 30 per cent of their income on rent compared to 40 per cent ten years ago.
 
Looking to rent in SF? You probably can’t afford it
Rent in San Francisco hit a new high in August, climbing 0.9 per cent to a record $3,500. The analysis from Zumper.com shows that the city remains the most expensive rental market in the US with no neighborhoods that are “affordable”. The research found that 28 of the 54 neighborhoods surveyed would set renters back more than $3000 for a one-bedroom apartment. A ripple effect is making rents in outlying parts of the metro also very expensive. New York ranks second in the national league table of high-rental cities with an average 1-bed costing $3,160 per month. Boston ($2,270), San Jose ($2,220) and Washington DC ($2,110) complete the top 5. Fourteen cities have seen double-digit percentage increases this year.
 
Klipsch family sell Indiana estate
The Klipsch family, known for their association with high-end entertainment equipment, are selling their equally high-end home. The estate in Carmel, Indiana comprises an 11,000 square foot home set in 2.3 acres. The four-bed home has a basement gym and surround-sound theater while outside has a backyard with veranda and saltwater pool. The indystar.com reports that the home is listed for $2.19 million.
 
 

COMMENTS

  • by Nancy doyle | 9/28/2015 8:52:23 AM

    Well one never knows for sure what lies Ahead.. I have seen interest rates go up and down but as long has we have work it works..

  • by Gordon miller | 9/28/2015 9:31:04 AM

    A housing market boosted by low interest rates can not sustain higher rates . It would mean homeowners accepting higher monthly payments for smaller houses . That's a tough sell . Giving up a 3% rate and jumping into a 5% rate ? I don't see it

  • by | 9/28/2015 9:36:57 AM

    I went and graduated from UCLA soi certainly know and respect the academic talent- however I work with people and most are overworked, worried about higher taxes, higher food prices, lower wages- lower rates for the past 8 years has been a godsend to this otherwise difficult times for many

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