Unemployment insurance and stimulus talks back on
So the bad news first. We are nearing the end of the expanded unemployment insurance under the CARES Act at the end of December and the number of people filing for unemployment keeps growing.
Around 5.9 million filed a “continued claim”
for state unemployment insurance the week of Nov. 14, according to the Labor Department. Continued claims are a rough proxy for the number of people receiving benefits.
There are 5 million workers who exhausted their allotment of traditional unemployment insurance and are receiving additional weeks of benefits via the CARES Act programs.
There are also around 9 million self-employed, gig and other workers currently receiving benefits through the temporary Pandemic Unemployment Assistance program.
Private payrolls paint an equally grim picture of the recovery. The latest ADP figures show that Companies hired 307,000 workers last month, well below the 475,000 estimates from a Dow Jones survey of economists.
The total represented a decline from the upwardly revised 404,000 in October and is the smallest gain since the 216,000 increase in July, according to the report.
Now for the good news. Stimulus talks are heating up again. A new bipartisan $908 billion plan was unveiled on Tuesday. The plan, according to the Washington Post, is light on details but seeks to reach a middle ground on numerous contentious economic issues. It would provide $300 a week in federal unemployment benefits for roughly four months — a lower amount than the $600 per week Democrats sought but still offer relief to tens of millions of jobless Americans.
The agreement includes $160 billion in funding for state and local governments, a key Democratic priority opposed by most Republicans, as well as a temporary moratorium on some coronavirus-related lawsuits against companies and other entities — a key Republican priority that most Democrats oppose. The measure also includes funding for small businesses, schools, health care, transit authorities, and student loans, among other measures.
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Work from home trending up again
After a return to the office environment in some cities, the recent uptick in COVID-19 infections has meant that some of those workers are back to working from home.
About a quarter of employees had returned to work as of Nov. 18, according to Kastle Systems, a security firm that monitors access-card swipes in more than 2,500 office buildings in 10 of the largest U.S. cities.
The nation’s occupancy rates dropped significantly last week, likely due to Thanksgiving, with the 10-city national average down to 17.6% — an 8.1% drop from the previous week. Every city measured on the Barometer experienced a decline in occupancy., the 10-city national average of the barometer fell from 27.1% to 25.1% last week—its lowest point since early September.
The holiday weekend aside, it has been clear that the Barometer has been dropping since fall when the 10-city national average was 27.1%.
VTS Office Demand Index (VODI) shows demand for office space is still down 56.4% from February 2020 pre-pandemic levels. The index tracks tenants of office properties entering the market across the nation.
In February 2020, the national VODI index value was 94. Three months later, in May 2020, the VODI had declined by 84% to an index value of 15. Demand initially increased steadily at around seven points a month from June through September.
Pre-COVID-19, the national VODI was consistently around 100 with some seasonal variation for roughly two years, demonstrating the stability of national office demand pre-crisis.
“This is, by far, the worst contraction in recent history for the office market as businesses grapple with a global pandemic,” said VTS CEO and co-founder Nick Romito said in a statement. “While we started to see some signs of life over the summer, businesses experienced a second wave of uncertainty in October due to resurgence of the virus, the elections and the markets. We expect it’s going to be a bumpy ride for months to come, although we’re confident in a long-term recovery.”
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Loans in forbearance creeping up, again
Yesterday, the FHFA announced that Fannie Mae and Freddie Mac will extend the moratoriums on single-family foreclosures and real estate owned evictions until at least January 31, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on December 31, 2020.
The number of loans now in forbearance increased from 5.48% of servicers’ portfolio volume in the prior week to 5.54% as of November 22, 2020. According to MBA’s estimate, 2.8 million homeowners are in forbearance plans. It’s something Rise&Shred calls Foreclosure Creep. The numbers are creeping up, as is the threat of a bigger jump, which is also creeping up on us.
The increase was across all loan and servicer types — including GSE loans, which had previously declined for 24 straight weeks, saw an increase last week. The share of Fannie Mae and Freddie Mac loans in forbearance increased for the first time in 25 weeks to 3.36% – a 1-basis-point increase.
Ginnie Mae loans in forbearance increased 10 basis points to 7.83%, and the forbearance share for portfolio loans and private-label securities (PLS) increased by 15 basis points to 8.63%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers increased 9 basis points from the previous week to 6.03%, and the percentage of loans in forbearance for depository servicers increased 3 basis points to 5.47%.
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said that the numbers also reflected an increase in forbearance re-entries, as
borrowers who had previously exited sought relief again.
“The increase in new forbearance requests may be the result of additional outreach to homeowners who had previously not taken advantage of forbearance opportunities,” he said in a statement. “However, the slowing rate of exits to a new survey low further highlights that borrowers still in forbearance are increasingly challenged by the renewed restrictions on economic activity to contain the surge
in COVID-19 cases.”
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