LegalShield Law Index Shows Real Estate Market Still in Rut

  • LegalShield’s Housing Activity Index points to restrained building activity in the first half of the year. 
  • Combination of supply-side and demand-size headwinds likely to mute growth, despite recent declines in mortgage rates 

ADA, Okla.--(BUSINESS WIRE)--Released today, the 1st Quarter 2019 LegalShield Law Index, a suite of leading indicators of the economic and financial status of U.S. households and small businesses, indicates the U.S. housing market continues to face strong headwinds that will keep growth subdued for the first half of 2019. 

“After a weak December, consumers are off to a slow start so far this year”

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The LegalShield Housing Activity Index eased 0.2 points to 111.1 in Q1 2019, due to a modest weakening in the real estate component. Meanwhile, housing starts fell to an annualized rate of 1.16 million in February and are essentially unchanged over the last two years. By some measures, housing market conditions are improving: the average 30-year mortgage rate has fallen nearly 90 basis points since November 2018, while the NAHB-Wells Fargo Housing Market Index has bounced back after falling to a 3.5-year low in December 2018 (though it remains well below 2018 levels). However, many of the supply-side headwinds that plagued builders in 2018 — tariff-inflated prices for steel and aluminum; high cost and lack of skilled labor — are likely to persist, while affordability issues may weigh on demand for new homes despite lower mortgage rates. 

“The latest tick in the LegalShield Housing Activity Index, which reflects demand for real estate and foreclosure legal services over the last quarter, continues to indicate that the real estate market remains in a rut,” said Scott Grissom, Senior Vice President and Chief Product Officer, LegalShield. “High prices for homes are putting downward pressure on consumer demand, while the combination of tariff-inflated prices for steel and aluminum and a shortage of skilled labor that is driving up labor costs will continue to create a drag on new residential construction activity for the first half of this year.” 

Similarly, the LegalShield Real Estate Index designed to track existing home sales and a component of the Housing Activity Index, edged down 0.6 point to 99.4 in Q1 2019 and is down 2.8 percent from a year ago. Although existing home sales jumped 11.8 percent in February 2019 to 5.51 million (annualized), they are still 1.8 percent below year-ago levels. The LegalShield Real Estate Index indicates existing home sales are unlikely to experience a prolonged rebound over the 2nd quarter in 2019. 

The LegalShield Consumer Financial Stress Index (CFSI) fell 1.7 points in Q4 to 74.3 after three consecutive quarterly increases, while the Conference Board’s Consumer Confidence Index declined more than 7 points to 124.1 in March 2019. The convergence of the two indices over the last six months suggests that LegalShield’s data, which is based on actual demand for legal services, correctly predicted that consumer confidence was likely overstated last year relative to economic fundamentals. 

“After a weak December, consumers are off to a slow start so far this year,” said Grissom. “The combination of disappointing retail sales data, rising credit card debt, and weakening demand for new vehicles may point to increased consumer stress levels later in the year. On the positive side, consumers currently enjoy robust wage growth and low inflation, which helps keeps the LegalShield Consumer Financial Stress Index historically low for now.” 

The LegalShield Bankruptcy Index rose (worsened) 3.9 points to 50.9 in Q1 — its highest level since mid-2015 — and is up 10 percent from a year ago. However, the index remains muted overall, and bankruptcy filings fell to a post-recession low in Q1, an unsurprising combination given low unemployment and annual wage growth of 3 percent or more for 7 months. Overall, the LegalShield Bankruptcy Index continues to indicate that bankruptcies are likely to remain muted in the near-term. 

The LegalShield Foreclosure Index eased 0.6 point to 58.5 in Q1 2019 and is down nearly 8 percent from a year ago. The index continues to closely track foreclosure starts, which edged up in the fourth quarter but remains subdued according to the Mortgage Bankers Association. Mortgage delinquency rates have held at decade lows, as just 1.06 percent of mortgage debt was 90+ days delinquent in Q4 according to the NY Fed — unchanged from Q3 and tied for the lowest level since 2006. The LegalShield Foreclosure Index continues to indicate that foreclosure activity is unlike to accelerate in the near term. 

The quarterly LegalShield Law Index reflects the demand for legal services among the company’s provider law firms in all 50 states. The Law Index is a suite of leading indicators of the economic and financial status of U.S. households and small businesses, including the LegalShield Foreclosure Index in addition to the Consumer Financial Stress Index, Housing Activity Index, Real Estate Index, and the Bankruptcy Index. 

About LegalShield 

A trailblazer in the democratization of affordable access to legal protection, LegalShield is one of North America’s largest provider of online legal subscription plans covering more than 4.375 million people. Its IDShield identity theft solution for individuals and families has more than one million members. LegalShield and IDShield serve more than 141,000 businesses. In addition, 34,000 companies offer LegalShield and IDShield plans to their employees as a voluntary benefit. Both legal and identity theft plans start for less than $25 per month. 

LegalShield’s legal plans provide access to qualified law firms and their attorneys with an average of 22 years of experience in family matters, estate planning, financial and business issues, consumer protection, tax, real estate, benefits disputes and auto/driving issues. Unlike other legal plans or do-it-yourself online services, LegalShield has dedicated law firms in 50 states and four provinces in Canada that members can access at a fraction of typical law firm hourly rates. 

IDShield provides identity monitoring and restoration services and is the only identity theft protection company armed with a team of Licensed Private Investigators to restore a member’s identity. 

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