Home prices pick up the pace
Housing experts are increasing their expectations for home price appreciation as rising prices show no signs of slowing.
Experts expect home prices to climb 4.1% in 2018, according to the 2017 Q4 Zillow Home Price Expectations Suervey, an increase in their expectations for 2018. One year ago, experts predicted home prices would grow 3% in 2018.
The quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts, market strategists, and economists about their expectations for the U.S. housing market in 2018 and beyond.
According to Zillow, the number of homes for sale has fallen on an annual basis for the past 33 straight months. Although building activity picked up slightly toward the end of the year, the biggest surprise of the 2017 housing market was the slow pace of single-family home building, according to the panelists. Only 16.7% expect it to change in 2018, a sign that limited inventory will still be a driving force in the housing market next year.
Experts believe 2017's low mortgage rates are likely to rise next year to around 4.5% from the current rate of about 3.9%. The average 30-year fixed mortgage rate has hovered around historical lows for years, and is well below the 6% rates seen during the run up to the housing bubble.
"The American labor market is stronger than it's been in decades and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes," said Zillow senior economist Aaron Terrazas. "Home building has not kept pace with this surge in demand and remains well below historical norms. We don't expect that these demand-supply imbalances will fundamentally shift in 2018: Demand will continue to grow and, though supply should increase somewhat, we still won't build enough new homes to meet this demand, contributing to higher prices. Higher mortgage rates will eat into buyers' budgets, putting even more price pressure on the most affordable homes for sale. Unless there is a fundamental shift in the number and type of homes for sale, this is the new normal of the American housing market."
Stanley chooses Hartford for ‘Smart Factory’ initiative
Stanley Black & Decker will open an Advanced Manufacturing Center of Excellence in downtown Hartford, Conn., to accelerate its Global Industry 4.0 "Smart Factory" initiative.
Called "Manufactory 4.0," named after the original Stanley Bolt Manufactory founded in 1843, the 23,000-sq.-ft. center will be located at One Constitution Plaza and will employ approximately 50 “industry 4.0” professionals.
The company has appointed Sudhi Bangalore, most recently WIPRO's global head of Smart Manufacturing and Industry 4.0 Solutions, to lead the center. The company is also launching an additive manufacturing accelerator with Techstars that will be housed at the new facility.
Manufactory 4.0 will serve as the epicenter for the latest technologies and processes with respect to Industry 4.0, according to Don Allan, CFO for Stanley Black & Decker.
“Just as Connecticut was at the heart of the first three Industrial Revolutions and has continued to have a strong manufacturing presence, we believe that the state has the potential to be a leader for what is often called the Fourth Industrial Revolution — the automation of manufacturing that includes the internet of things, cloud computing, artificial intelligence, 3-D printing, robotics and advanced materials,” Allan said.
"Strong urban cores, and in particular a vibrant capital city, are essential to Connecticut's ability to thrive which is why we decided to locate this important new initiative in Hartford," said Jim Loree, Stanley Black & Decker's president and CEO.
"Our team has worked closely with Mayor Bronin's office, and we are excited to be a part of building a vibrant, strong capital city,” Loree said. “With the budget now passed, the hard work can begin to solve some of the state's structural fiscal challenges and put the state on a more sound economical path. We cannot lose the sense of urgency and must recognize that the state is at a critical juncture. As a company founded in New Britain, Conn., almost 175 years ago, we have expressed our commitment from a social responsibility perspective to being part of the solution."
Bangalore will serve as Stanley Black & Decker's VP of Industry 4.0, reporting to Allan. Prior to serving in his current role at WIPRO, Bangalore was the company's global practice head for industrial automation. He has held operations and business unit manager leadership roles across a number of technology companies, including Danaher Corporation, Siemens, and Rockwell Automation.
Stanley Black & Decker currently operates approximately 30 manufacturing facilities in the U.S., including three in Connecticut, with more than 100 manufacturing facilities globally.
Regulatory Wrap-Up: Immigration raids, paid leave and wages
Massachusetts: Ahead of the deadline for the first round of signatures, Raise Up Massachusetts announced that they have secured the required number to place an initiative on the 2018 ballot. The initiative would raise the state minimum wage to $15 per hour by 2022. The signatures must now be validated by state election officials. Activists will have additional time to gather signatures (should they need it) by June 19, 2018, if the legislature fails to act on the issue.
Missouri: According to recent filings, advocates pushing for a $12 per hour minimum wage increase on the 2018 ballot have received more than $500,000 in funding from unions and other labor-backed groups. The proponents have until May to turn in enough signatures (a relatively low threshold) to qualify for the November ballot.
New Jersey: At Governor-elect Murphy’s first press conference with legislative leaders, he stated that a $15 per hour statewide minimum wage will be one of his first priorities when he is sworn in on Jan. 16.
Vermont: Anticipating the recommendation of a special legislative committee to increase the state’s minimum wage to $15 per hour, the Senate President Pro Tem stated that the increase is one of his top priorities for the 2018 legislative session. The committee plan calls for an increase to $15 per hour but does not specify the length of time over which the increase would phase in.
Maryland: Gov. Hogan announced plans to introduce a compromise paid leave bill in the 2018 session. The governor vetoed a bill earlier this year that may have enough support in the Democrat-controlled legislature for a veto override. The governor’s proposal seeks to allow smaller businesses a longer implementation timeline and includes state preemption. The proposal was met with opposition from Democratic leadership in both chambers.
Massachusetts: Ahead of the deadline for the first round of signatures, Raise Up Massachusetts announced that they have secured the required number to place a paid family leave initiative on the ballot in addition to a $15 per hour minimum wage mandate. The signatures must now be validated by state election officials. The proposal seeks to provide a maximum of 16 weeks of paid leave at up to 90% of average weekly wages with a maximum of $1,000 per week. It would also create a trust fund into which employers would pay 0.63% of each employee’s annual wages. Activists will have additional time to gather signatures (should they need it) by June 19, 2018, if the legislature fails to act on the issue.
New Hampshire: With bipartisan support, a bill to establish a paid leave program financed by a 0.5% payroll tax on employees recently passed out of a house committee and will move to the floor for consideration next session. It would provide up to twelve weeks of paid leave, parental or sick time per year at 60% of the employee’s current salary.
San Diego: Several local restaurants are being sued for adding surcharges to customers’ bills to offset added costs associated with the recent escalation in the city’s minimum wage. The pending lawsuits allege deceptive advertising, claiming customers were not made aware of the surcharge until after the meal.
Santa Monica, CA: The city attorney’s office announced its first successful prosecution of a business owner for failing to pay the city’s minimum wage and retaliating against an employee for asserting her wage rights. The retail shop owner must pay employee back wages, fines and complete community service hours.
New York: New statewide regulations were officially published Nov. 22 and are subject to a 45-day comment period before taking effect. The new rules are applicable to employers as defined under the state’s Miscellaneous Industries and Occupations wage law, which only applies to traditional retailers. Restaurants are covered under a separate statute, the Hospitality Industry wage law. The new “call-in” pay regulations will only impact retailers, while restaurant employers remain subject to the existing state regulations governing “call-in” pay.
Los Angeles: An opinion piece in the Los Angeles Times suggests that L.A. city or county government may take up restrictive scheduling in the near future. There have been rumors over the past year of potential legislative activity in L.A., following the path of San Francisco and Seattle. Similar legislation at the state level has failed to move, which may add additional motivation for local policymakers to take action.
New York City: The city’s “fair workweek” laws went into effect Nov. 26. The city ordinances mandate that fast food employers provide 14 days advance notice of work schedules, offer new hours to existing employees prior to bringing on new workers, allow employees voluntary paycheck deductions to non-profits of their choice and prevent employers from scheduling employees for multiple shifts with less than 11 hours between shifts. The city law also calls for specific record keeping requirements for retailers as well as fast food employers.
Multnomah County, Ore.: Advocates announced that they have collected enough signatures to place a 1.5 cent per ounce tax on sugary drinks on the May 2018 ballot, but they made the strategic decision to wait for the November 2018 ballot, determining they have a better chance at passage with higher turnout in Portland and other areas of the county in November.
U.S. Senate: The U.S. Senate’s tax reform legislation passed 51-49, as a result of last minute negotiations with key Republican Senators. The language that passed the Senate differs from what previously passed the U.S. House. The most likely path forward is that the bill will go to a conference committee and be voted on again in both chambers before it is advanced to the president’s desk.
NLRB: Management-side attorney John Ring is going through a final White House background check to fill an upcoming Republican vacancy on the National Labor Relations Board. Ring would fill the seat of Phil Miscimarra, whose term expires Dec. 16.
OSHA: For the second time, the Occupational Safety and Health Administration extended the deadline for employers to file illness and injury reports. Originally the deadline was July 1 and was extended to Dec. 1. The new deadline is Dec. 15.
Missouri: The secretary of state certified that the right to work law passed earlier this year will be placed on the 2018 ballot for voter approval. Missouri allows residents to call for a ballot measure on new legislation by collecting signatures from at least 5% of voters (over 100,000) from six of the state’s eight congressional districts.
New York City: The National Restaurant Association’s legal center initiated a lawsuit seeking to block a component of the city’s ordinances dealing with restaurant scheduling and payroll policies. Specifically, the group is seeking to bar the law that allows for voluntary employee paycheck deductions to nonprofits of their choice. The ordinance, supported by labor leaders, was intended to provide a funding mechanism for local labor organizations.
CEO Pay Survey: A survey released by Korn Ferry highlights the concern that many entry-level employers have with the upcoming mandated disclosures of CEO pay compared to median worker pay. The reporting, due for the first time by publicly traded companies in their 2018 earnings reports, could show ratios up to 1,100% when comparing the chief executive against the median compensation level of all other employees. This level of disparity will certainly gain national attention and cause reputational issue for many brands and industries.
U.S. Senate: The tax reform bill that passed the U.S. Senate contains a repeal of the individual mandate which is a central piece of the ACA. President Trump has said he would support two separate proposals intended to stabilize insurance markets in exchange for support of the tax reform bill. One proposal would fund ACA insurer payments, and another would fund states’ reinsurance programs for high-cost patients. Some centrist Republicans believe both provisions would help stabilize the insurance markets following the repeal of the mandate; however, some conservatives have raised concerns regarding the costs, putting the deal in jeopardy. As the bill is likely headed to a House/Senate conference committee, it’s unclear how this issue will be addressed in the final legislation.
ITC: The U.S. International Trade Commission officially recommended that the U.S. impose tariffs on large residential washer imports. The administration is expected to issue a final ruling early next year. While the proposed tariff would affect only those foreign manufacturers in countries without U.S. trade agreements, South Korean manufacturers such as LG and Samsung would be impacted given their sourcing practices. The proposed tariff could impact ongoing discussions over the KORUS trade agreement between the United States and South Korea.
ICE: According to a U.S. Immigration and Customs Enforcement internal memo, the agency is planning a major worksite enforcement operation at an unnamed national food service chain. The intent of the operation is to identify criminal activity and enforce immigration and wage laws where applicable.
- As we’ve witnessed under previous administrations, ICE raids are likely to draw national headlines. Recent reports indicating that raids will occur in the coming weeks at food service chains should be a cause for concern for retailers. Some operators may find their supply chains under scrutiny in addition to their workplaces. Given the President’s tough talk on immigration, many expect this round of raids while be much more highly publicized compared to previous actions.
- The conversation around paid leave benefits continues to evolve. A recent New York Times article highlights the growing prioritization, by millennials in particular, of expanded leave policies in determining where they live and work. Recent studies have found that millennials now feel policies such as paternity leave should be part of normal leave packages from employers, moving the goalposts in the employee marketplace yet again.
Legislature Status for Week of 12/4/17
- The United States Senate is in session this week
- The United States House is in session this week
- The following state legislatures are in session year round: Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Wisconsin.
- Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania are all meeting actively this week.
The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.