container living2

What to do with all of those leftover shipping containers?

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With trade and tariffs constantly in the news lately, we thought it would be a great idea to focus on what to do with all of those extra shipping containers…..the answer?  Turn them in to housing.

Shipping containers didn’t exist in 1950. Today, roughly seventeen million travel the world on ships, trains, and trucks. Laid end to end, they’d stretch around the globe almost four-and-a-half times. These 40-foot shipping containers can be purchased with prices ranging from $1,500 to $3,500.

While re-purposing these containers has been commonplace in smaller “tiny home” communities, it appears that living in containers has just entered the main stream with multifamily units.

Recently, there was a new listing offering “units” for rent in a brand new container apartment building in Washington, D.C. where each unit costs about $1,099 per month, and in light of DC’s unaffordable rents, this seems like a good deal for heavily indebted millennial’s.

Some pre-fab container homes are more luxurious than others, ranging from $30,000 to $449,000 for a massive luxury duplex. The image below is of a Redondo Beach House showing how container homes can look modern and inviting:

container living

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.50 MBS) lost -37 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher for the week.  It was the third straight week of higher rates with MBS selling off a total of -76 basis points over the past three weeks.

Overview:  Across the board, we had strong economic data in just about every sector.  We saw inflation in the CPI release, a strong job market in the JOLTS report, a record reading in Small Business Optimism and a very strong Consumer Sentiment reading.  Even Retail Sales were solid when prior revisions were taken into account.  The bond market also shifted to put more probability of a Fed rate hike in September AND December despite the overhang of tariffs.  This combination of growth and inflation pressured long bonds and moved mortgage rates to the highest levels since May.

Retail Sales: At first glance, the August data may look weaker than expected, but not really. The headline reading hit 0.1% vs est of 0.4%. So, it looks light. However, that is only due to the fact that July was much more robust than originally reported and revised upward to a gain of 0.7%. Ex-Autos…same story as the reading was 0.3% vs est of 0.5% but July was revised upward to 0.9%. Gas station sales, restaurants and ecommerce all had solid gains.

Industrial Production:
 Surged the most since 2010, rising by 0.4% in August. July had a major revision upward from 0.1% to 0.4%. Mining jumped (oil production) and utility usage jumped as the nation ran A/C units non stop during the hot months of July and August.

Consumer Sentiment: 
The preliminary University of Michigan survey for September, jumped to 100.8 vs est of 96.6. It is the second highest reading this year.

Inflation Nation:
 The August Consumer Price Index (CPI) was lighter than expected but not as much as Wednesday’s PPI miss. The headline YOY CPI showed a 2.7% increase vs expectations of an increase of 2.8%. The Core (ex food and energy) came in at 2.2% vs est of 2.4%.

The Talking Fed:
 They released their Beige Book. Overall, the report painted a very strong economic picture. Here are some key highlights:
• The word “tariff” was used 41 times compared to 31 times in July.
• Despite concern over tariffs, the U.S. economy is expanding at a “moderate pace” with tight labor market conditions.
• All 12 districts cited major labor shortages and a tight labor market among high-skill workers but also a number of districts noted shortages of lower-skilled workers at restaurants, retailers,etc.
• Wage growth was mostly characterized as modest or moderate, though a number of districts cited steep wage hikes for construction workers.

Small Business Optimism: The August NFIB Index jumped to 108.8 vs est of 108.1. This is now a new all-time record since this index was created 45 years ago. The survey saw gains in plans to increase inventories, to make more capital outlays and to increase employment.

Jobs, Jobs, Jobs: The Job Openings and Labor Turnover Survey (JOLTS) report hit another new all-time record high with a reading of 6.939M Jobs that are unfilled. It is the seventh straight reading above 6M.

What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.