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62 CONSUMER EXPECTATIONS TOWARD HOUSING AND ECONOMY GROWING MORE POSITIVE Consumer expectations for the housing market are showing a slightly more positive outlook for the U.S. economy, according to the Federal Reserve Bank of New York's Center for Microeconomic Data June 2015 Survey of Consumer Expectations (SCE). e SCE contains information about how consumers expect overall inflation and prices for housing, food, gas, and education to behave. It also provides insight into Americans' views about job prospects and earnings growth and their expectations about future spending and access to credit. e SCE also provides measures of uncertainty in expectations for the main outcomes of interest. Expectations are also available by age, geography, income, education, and numeracy. e survey found that home price change expectations rose to 3.5 percent, their highest level this year, and median earnings growth as well as household spending growth expectations increased from the prior month. Median consumer inflation expectations at both the short- and medium-term horizons continue to be stable, while labor market expectations also continued to improve and credit availability expectations were largely unchanged. According to the New York Fed, median home price change expectations rose from 3.3 percent in May to 3.5 percent in June, their highest reading this year, but still below the 2014 average of 3.8 percent. e survey credits southern respondents as the cause for the rise in median home price expectations. On the other hand, median home price uncertainty declined from 3.6 percent in May to 3.1 percent in June, the lowest reading since the survey began. Median household income growth expectations remained steady at 2.9 percent, with an increase for younger household heads but a decline for household heads in the 40-60 age range, the survey said. Household spending expectations rose from 4 percent in May to 4.3 percent in June, their second-highest reading this year. Spending expectations rose for all age and income groups. Perceived change in credit availability compared to a year ago was largely unchanged from the previous month, the New York Fed said. Year-ahead expected credit availability continues to improve with 33 percent of consumers expecting credit availability to be much or somewhat harder a year from now compared to today. Earnings growth expectations rose from 2.3 percent in May to 2.5 percent, their second highest reading this year, the survey determined. e increase in earnings growth expectations was prevalent across all demographic groups, but especially notable for lower education and lower income workers. e mean perceived probability of losing one's job rose slightly from the series low of 13.8 percent in May to 14 percent in June, its second-lowest level since July 2013. e mean perceived probability of leaving one's job voluntarily rose to 20.3 percent, and the mean perceived probability of finding a job in the next three months jumped to 55.6 percent, nearly as high as the series high of 55.7 percent reached in March this year. In July, Fannie Mae's June 2015 National Housing Survey found consumer attitudes toward the current condition of the home selling market and future home rental prices may launch purchase activity forward for the rest of 2015. Optimism among consumers about the housing market has reached new survey highs, and strong job and income growth are making consumers appear more favorable in the selling market, indicating a possible increase in the existing home supply. "Our June survey results show the positive impact on housing of job and income growth," said Doug Duncan, SVP and chief economist at Fannie Mae. "e expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates. A complementary rise in the good time to sell measure suggests that limited inventory, which is putting upward pressure on house prices, gives an increasing advantage to sellers. Together, these results point to a healthier home purchase market, with more renters likely to find owning to be more cost-effective than renting and more sellers likely to put their homes on the market." VACANCY RATES AMONG SFR TRANSACTIONS ARE TRENDING HIGHER Vacancy rates among single-family rental securitizations are trending higher, according to data reported by Morningstar Credit Ratings in its July 2015 Single-Family Research: Performance Summary Covering All Morningstar Rated Securitizations released at the end of July. Morningstar had anticipated higher-trending vacancy rates in June based on a higher number of lease expirations in recent months; the company cited as an example a correspondence between a slight increase in five Invitation Homes transactions and higher levels of lease expirations during the summer months. e retention rate for month-to-month leases dropped in 15 of 17 transactions in June, and there was also a slight drop in the retention rate of scheduled lease expirations. Notable declines in retention rates for scheduled lease expirations from May to June occurred in two Colony American Homes Transactions, CAH 2014-1 (which dropped from 81.7 percent to 68.2 percent) and CAH 2014-2 (which dropped from 81.2 percent to 69.9 percent). Even with the higher-trending vacancy rates, monthly retention rates stayed within Morningstar's expectations, in the mid-70s to low-80s range. Still, the report said, "Vacancy rates generally remain low, though they may continue to migrate higher as more leases expire. Cash flows remain sufficient to cover bond obligations, and in general, the asset class performance is in line with recent history." e transaction with the highest concentration of month-to-month (MTM) leases in June was the recently-closed Tricon American Homes 2015-SFR1 with 17.2 percent. Other deals with higher-than-average shares of MTM leases were American Residential Properties 2014-SFR1 (11 percent) and Silver Bay Realty 2014-1 (8.1 percent), both of which increased slightly from May. Morningstar reported single-family rental securitizations typically report MTM concentrations below 5 percent. According to Morningstar, though delinquency rates generally remained low, the rate on the American Residential Properties 2014-SFR1 securitization climbed from 2.5 percent in May up to 3 percent in June, and it retained the highest delinquency rate among all transactions.

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