Real Estate News: Real Estate Investing Podcast

In this Real Estate News Brief for the week ending January 21st, 2023... why mortgage rates are looking more attractive, the new office space investing opportunity, and a new home design trend called "Barkitecture" that makes pets a priority. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week and more evidence that prices are coming back down to earth. The government reports that wholesale prices were .5% lower in December. It was the biggest drop in the Producer Price Index since April of 2020 when the economy shut down because of Covid. The monthly decline brings the annual rate of wholesale price inflation down from 7.2% to 6.2%. (1) The Federal Reserve will be analyzing the latest reports on inflation ahead of a rate hike decision on February 1st. The Federal Funds rate is currently within the range of 4.25 and 4.50%. Now that inflation is receding, several Fed officials have spoken out, saying they are still determined to "stay the course" but are considering a smaller quarter-point rate hike. They will also have access to the latest report on the Personal Consumption Expenditure index, or PCE, right before that meeting, which could help sway their opinion. The PCE is their preferred inflation gauge because it goes beyond household expenses and accounts for changes in consumer behavior as prices rise. (2) Although several big tech companies are announcing layoffs, jobless claims remain low. The Labor Department reports just 190,000 initial applications for unemployment last week. That's down from 205,000 the week before. (3) It indicates that the job market is still strong, but then newly announced layoffs won't be reflected in the unemployment numbers just yet. Among the companies announcing a substantial number of layoffs are Google parent Alphabet, Amazon, Carvana, Coinbase, Lyft, Facebook parent Meta, Microsoft, Robinhood, Salesforce, Snapchat parent Snap, payment processor Stripe, Twitter and Wayfair. (4) In the latest housing market news, housing starts were a mixed bag for residential construction. The Commerce Department reports that, overall, housing starts fell a seasonally adjusted 1.4% to 1.38 million. That includes an 18.9% decline in multi-family starts and an 11.3% increase in single-family starts. The Northeast has the biggest surge in single-family starts at 96.9%! When it comes to permits, they were down 6.5% for single-family homes and up 7.1% for multi-families. (5) Builders are feeling more confident about the housing market. The National Association of Home Builders says the monthly builder confidence index was up four points in January to 35. That's far lower than it was a year ago, at 83, but the NAHB says that builders are seeing a "light at the end of the tunnel" as mortgage rates recede and demand increases. NAHB chairman, Jerry Konter says: "The rise in builder sentiment means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023." (6) Existing home sales continue on a downward trend. The National Association of Realtors reports a 1.5% drop to a seasonally adjusted annual rate of 4.02 million homes in December. It's the 11th month of declining sales and the lowest level of sales activity since November of 2010. Year-over-year, existing home sales are down 34%. High home prices and mortgage rates have scared a lot of buyers away, but there's also a huge lack of inventory, in part, because potential buyers are postponing their plans to sell. (7) Mortgage Rates Mortgage rates are declining and getting closer to the 6% level. In the last week, Freddie Mac says the average 30-year fixed-rate mortgage was down 18 basis points to 6.15%. The 15-year was down 24 points to 5.28%. Freddie says: "Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern." (8) Some builders are also providing a bigger incentive with mortgage rates as low as 3%. They prefer to pay points to lower a customer's mortgage rate than lower the price of the home, because that could impact the value of other homes that are already sold. (9) In other news making headlines… Bargain Hunters Buying Office Space Office space is on sale right now, and some brave investors are pouncing on the opportunity. Bisnow reports that investors are getting creative about what they'll do with this office space. While some believe the office market will return, others are buying up high-quality properties at firesale prices with plans to convert them into something else. like apartments or condos or something other than office space. (10) Tom Davenport of Colliers says: "There are a lot of small investment funds that have been waiting for this day." New Home Design Trend: "Barkitecture" Pets are becoming a top priority when it comes to home design. Realtor.com r

The Fed's relentless effort to stomp out inflation is having a huge impact on one of the nation's biggest builders. KB Homes reported a homebuyer cancellation rate of 68% in December. And the "housing market reset" isn't over yet. Although the latest inflation reports show that inflation is subsiding, the cost of a home is still too high for many buyers. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Inflation is Slowly Decreasing A report on the Consumer Price Index shows a decline of .1% in December with an annual rate of 6.5%. (1) It's the lowest rate of inflation we've seen in more than a year, and a big drop from a peak of 9.1% last summer. Lower oil prices accounted for most of the latest decline. When you remove prices for fuel and food, the monthly core rate of inflation was .3% with an annual rate of 5.7%. According to MarketWatch, there were few negatives in the CPI report, although the cost of housing is still rising. The report shows the annual cost of shelter at a 40-year high of 7.5%. And those high prices are scaring a lot of potential buyers. Surge in Contract Cancellation Rates For KB Home, the Q4 cancellation rate of 68% was almost double what it was in the third quarter. And much more than that compared to a year earlier when it was just 13%. The last time the cancellation rate was anywhere near that level was at the beginning of the pandemic, but even then it was around 40%. A Fortune article says that, historically, the cancellation rate for builders has only gone as high as 47%. (2) The data varies from builder to builder and metro to metro. According to John Burns Real Estate Consulting, the Southwest and Texas experienced high cancellation rates of 45% and 39% respectively. Zonda's chief economist Ali Wolf tweeted recently that the cancellation rate in Phoenix hit 70%. Based on data from John Burns, the nationwide contract cancellation rate was 25.6% in October. That's up from 7.9% in October of last year. "Conditions Remain Challenging" KB Home said in a statement: "Current conditions remain challenging. High mortgage rates and persistent inflation, together with an uncertain economy, have made homebuyers more cautious since the middle of last year." That's putting affordability out of reach for many people. Others may be hoping that home prices will go lower in the months to come. For many buyers, it's not a choice to cancel. They may have signed a contract and paid their deposit before the home was built, and then with construction delays, and a steady increase in mortgage rates, are finding out they no longer qualify for a loan. Unfortunately, for some, that means the loss of an earnest money deposit, although a survey of 100 builders by John Burns indicates that most builders will return that deposit. For buyers who don't get their money back, there's not much they can do about it. Florida attorney Craig Rothburd says: "Everything in these agreements is drafted in favor of the developer." That includes a warning that they could lose their deposit if they back out. Housing Market "Reset" Continues The situation has left home builders with a lot of inventory, and a lot of strategizing to reduce that inventory. Many are helping buyers by offering mortgage rate buydowns instead of price cuts. KB Home says it is very cautious about price cuts because it doesn't want to spook buyers who are already under contract. If they think there's a cheaper option, it could lead to more cancellations. The Federal Reserve sees the current housing market situation as a "reset" to bring demand in line with supply, along with lower home prices. Higher mortgage rates typically push home prices lower, which has started to happen, but home prices are still too high for many homebuyers. And lower-priced homes are in short supply. A return to lower mortgage rates could help but with the current fight against inflation, they are expected to remain in the 6% range for this year. The increase has added about a $1,000 to a typical monthly mortgage payment. According to The National Association of Homebuilders, the monthly payment on a $450,000 new home rose from $1,925 at the beginning of 2022 to $2,923 for the same home by the end of the year. (4) New Home Affordability Weakens That has substantially reduced the number of households that can afford to buy a median-priced new home. NAHB drew a comparison. It says that a mortgage rate of 3.22% is affordable for 34% of U.S. households. When that rate goes up to 6.42%, which is about where it is now, just 22.3% of households can afford that home. And, when the mortgage rate goes above 7% like it did in October, only 20.3% of households earn enough to qualify for a loan. At that level, you'd need an income of almost $150,000. Always keep in mind that reports like these are averaging the results for the nation as a whole. Sub-markets will vary, and many of them are still affordable.

In this Real Estate News Brief for the week ending January 14th, 2023… the good news about inflation, a few new potentially hot real estate markets, and the recent surge in U.S. population growth. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and good news about inflation. For the first time since the beginning of the pandemic, consumer prices were down. The Labor Department reports that the Consumer Price Index fell .1% in December. The decline brings the annual rate of inflation down from 7.1% to 6.5%. It was up as high as 9.1% last summer. The core rate of inflation is considered a more accurate gauge of inflation because it eliminates food and gas prices which can be volatile. That rate was down .3% to a core rate of 5.7%. (1) The December reading is proof that inflation is subsiding, and is giving economists hope that the Federal Reserve will back off on the rate hike gas pedal. Senior economist Dean Baker at the Center for Economic and Policy Research says: "It's time for the Fed to declare victory and stop the rate hikes!" But in general, economists don't think that will happen. Instead, they are predicting the Fed will go easy on the rate hikes with a quarter point hike at their meeting on February 1st, and possibly another quarter point hike in March. That would bring the Federal Funds rate to a range of 4.75% to 5%. What happens next might be too far off to predict, but economists at the CME Group are forecasting a pause followed by a half point rate cut later this year. (2) The job market continues to show strength. New claims for unemployment benefits were down last week to 205,000. That's a 1,000 claim drop from the week before. Wall Street economists had expected a 10,000 claim increase. There were also 63,000 fewer continuing claims for a total of 1.63 million people collecting unemployment benefits. (3) Consumers are feeling much more confident about the economy. The University of Michigan's consumer sentiment index jumped from 59.7 to 64.6 in December. That's still far from a peak of 88.3 in April of 2021, but it's a big improvement over recent levels. (4) Mortgage Rates Mortgage rates swung lower last week. Freddie Mac says the average 30-year fixed rate mortgage was down 15 basis points to 6.33%. The 15-year was down 21 points to 5.52%. (5) And they could be heading lower. Economist Nadia Evangelou of the National Association of Realtors believes the 30-year will dip below 6% in the near future, and will likely stabilize in the 5% range for the rest of the year. (6) In other news making headlines… Rent Growth Is Slowing Down Renters are expected to gain some bargaining power in 2023 as rent growth slows, and the vacancy rate rises. According to ApartmentList, the national median rent growth was 3.8% last year, and it's expected to slow further this year. The report shows that 90 of the nation's 100 largest cities saw an end-of-the-year decline for apartment rents with a vacancy rate of 5.9%. (7) But not all markets are created equal. The Sun Belt markets have experienced phenomenal growth over the past few years. According to some analysts, they may have hit a growth peak, with cities like Tampa and Tucson gaining almost 40% in rent growth. Although demand is still driving those markets, Apartment List expects more affordable cities in the Midwest to attract attention this year. It says that during the last six months, the top three cities for growth were the Midwestern cities of Indianapolis, St. Louis, and Oklahoma City. North Texas Popularity Universal Studios is also recognizing North Texas as a strong growth market, with the announcement of a new theme park. It plans on building a 97-acre theme park in Frisco, Texas, where the population has almost doubled from 117,000 in 2010 to more than 200,000 in 2020. Frisco Mayor Jeff Cheney said in a statement: "Frisco is one of the fastest growing cities in the U.S. and has been recognized as a great place to plant professional roots and raise a family." (8) Frisco is part of an area north of Dallas that is attracting technology companies, including several large chip-making facilities. That's creating tens of thousands of jobs, and a strong demand for housing. This is why we started our Texas Single Family Rental Fund – to help investors capitalize on the growth in this area. If you want to find out more about that, go to GrowDevelopments.com. Post-Pandemic Baby Boom U.S. population growth rebounded during the last two years. According to Census Bureau data, it hit an historically low birth rate of .16% between 2020 and 2021. And then it went into overdrive, and jumped to .38% from 2021 to 2022. That growth spurt added about 1.25 million people to the population roster for a total of 333 million. Florida was the fastest growing state with a growth rate of 1.91%. It also had the second largest nume

In this Real Estate News Brief for the week ending January 7th, 2023... home loan rates are hitting home prices, rent growth slows on apartments and single-family rentals, and lumber prices have returned to pre-pandemic levels. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. Federal Reserve officials are seeing a long-term need for higher interest rates, according to the minutes of their last meeting. They raised the short-term rate by a half point at that meeting to a range of 4.25% to 4.50%. That's after four three-quarter point rate hikes during past meetings. Minneapolis Fed President Neel Kashkari sees the federal funds rate going as high as 5.4%, or higher if inflation doesn't settle back down. Their preferred inflation gauge showed a core rate of 4.7% in November, which is well above their target rate of 2%. (1) At this point, the economy remains strong with a Q4 GDP of 3.9% and a job market that is running hotter than the Fed would like to see. Last week, unemployment applications fell to a 3-½ month low of 204,000. As reported by MarketWatch, jobless claims were down in 30 of the 53 states and U.S. territories. Continuing claims were also lower by 24,000 to a total of 1.69 million. This kind of data shows that the economy continues to grow as the Fed raises rates to slow the economy and tamp down inflation. (2) The latest report on job growth shows that U.S. companies added 223,000 jobs in December and the unemployment rate dipped from 3.6% to 3.5%. That's more proof of economic growth, but the report also shows that wage growth is slowing down. As MarketWatch reports, hourly wage growth was only up .3% in December to an annual rate of 4.6%. That's down from 4.8% last month. (3) The latest report on job openings shows that they decreased slightly from October to November, to a total of 10.5 million. It also shows that workers are quitting in high numbers. Both are signs of a strong job market. (4) We have a bit of housing market news. The National Association of Home Builders released its construction spending report for November which shows a .2% increase. That's higher than a forecast by Wall Street analysts who expected a .4% drop. Private residential construction was down half a point while private non-residential spending was up almost two points. (5) Mortgage Rates Mortgage applications were down last week, as rates moved higher. Freddie Mac says the average 30-year fixed-rate mortgage was up 6 basis points to 6.48%. The 15-year was up 5 points to 5.73%. (6) It's been a roller coaster ride for mortgage rates. Rates were subsiding at the beginning of December, but they surged again during the second half of the month. According to the Mortgage Bankers Association, mortgage application volume was down 13.2% during the last two weeks of the year. For refinancing loans, there was a bigger drop of 16.3%. (7) In other news making headlines... High Loan Rates Hit Home Prices Higher mortgage rates are taking a bite out of home price growth. According to CoreLogic data, annual home price growth dropped below 10% for the first time in almost two years. It was down 8.6% and is now 2.5% lower than it was last spring and falling. Analysts expect to see "negative" home price growth sometime this spring, before it bounces back into the 2 to 3% range, next fall. (8) The Sun Belt states are showing the highest home price growth, with Florida, South Carolina, and Georgia leading that list. Washington, D.C. is at the bottom, with a current year-over-year reading of 1.2%. Rent Growth Declines Faster than Normal Rent growth is also slowing down. Apartment List's National Rent Report shows that apartment rent growth was down in December, for a fourth month in a row to an annual rate of 3.8%. That's a far cry from the 17.6% rate of growth in 2021. (9) Single-family rent growth is showing more strength. According to data from CoreLogic, single-family rents are still growing at an annual rate of 8.8%. That's the lowest rate of appreciation we've seen in more than a year, but it's also about three times higher than it was before the pandemic. Lumber Prices Come Back to Earth Lumber prices have finally come back down to earth. According to industry experts, they are now around $375 for 1,000 board feet of framing lumber. That's cheaper than pre-pandemic levels of around $400, and much less than a pandemic peak of $1,733. (10) Lumber prices are usually the highest in April and May so some of the price drop is due to the season. But the experts are not expecting to see another huge run-up in prices next Spring. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! You can find out more about real estate investing as a member of RealWealth. It's free to join at newsforinvestors.com. Thanks for listening. I'm Kath

The commercial real estate market is in for a rough ride this year. Many mortgages become due in 2023, and refinancing could be impossible for some property owners because of high interest rates. That situation is expected to shake things up a bit, and lead to more defaults, subleasing, and vacancies. As a MarketWatch headline suggests: "The party is over in commercial real estate." (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Lenders say there's an estimated $450 billion worth of commercial real estate loans coming due within the next four years. Property owners will be forced to refinance at much higher interest rates, for properties that may have also lost value. It's a double whammy that could result in property sales and/or bankruptcies. Higher Rates & Lower Valuations And that's not including a decline in lease renewals, which is already happening. You may have seen headlines about some of the big tech companies cutting down on their square footage – companies like Amazon, Meta, and Salesforce. According to Western Asset Management's Greg Handler: "You had all these large tech companies signing big new leases, which was getting the market comfortable with the idea that the office sector was going to recover over the long term." But with many companies retreating, Handler says there are big questions as to "who is going to pick up the extra square feet, and at what price." As MarketWatch reports: "Landlords tend to default when debt comes due and financing dries up, a situation that can be exacerbated when a property's cash flows or valuation falls." Bank of America's Alan Todd says of the situation: "If you're in a property where valuations are lower (and) your rate is significantly higher, how are you doing to refinance successfully?" CRE Price Growth Slows, but Positive Commercial property prices haven't dropped significantly yet. One index mentioned in the MarketWatch article says they are still up 7.3% for the year, and 123.5% from 10 years ago. But Todd at BofA thinks they could be headed lower by as much as 20 to 30%. He says: "You're talking about a secular, not cyclical, change for certain property types, whether those are regional malls or some of the lower quality offices. Some of those could be fairly problematic." Steve Madura of Illinois' Hilco Real Estate offered a much bleaker forecast for commercial real estate in a Bisnow article. His company specializes in distressed assets, and he says the need for companies to repay or refinance mortgages will lead to a so-called "reckoning" that will (quote) "dwarf the 2008 financial collapse." (2) Madura is calling the mix of high interest rates and a frozen capital market a "distress bubble." He says distress is happening sooner than expected, and the impact could ripple through the market. As more and more borrowers face the need for refinancing, we may see more of them heading for the exit. Distress Creates Investing Opportunities Of course, that kind of distress creates investing opportunities, but Madura sees it as potentially too much of a good thing. He says: "There are huge rows of office buildings in Chicago with 50% vacancy rates. Do you want to convert that many office buildings to residential? That only goes so far." That doesn't mean commercial investors should ignore office space. Real estate strategist Andy Graiser says that some investors believe they should wait for a better deal later this year, but he says it might be wise to grab a deal now if it's a good property, and the numbers make sense. He says: "The demand is out there." Oxford Economics expects somewhat of a downturn. Its research shows a (negative) -2.2% total return for commercial real estate in 2023. In 2022, that figure was a (positive) 4.2%. The retail and hotel sectors are expected to be the only ones that will end the year with a positive total of 1.8% and 1.2% respectively. A decline of 5% is expected for residential property. (3) Reshuffling of Real Estate Fortunes Although real estate experts anticipate another difficult year for commercial properties, they are also seeing the beginning of a reshuffling of real estate fortunes. Bei Capital founder Collin Lau told Bisnow that he expects interest rates to peak, plateau, or potentially decline in the first quarter. He says: "As interest rates start to normalize, that will bring investors back to the market." The Bisnow article goes into more depth on the topic. You can reference that article and the others mentioned int this podcast in the show notes at newsforinvestors.com. Our plan at Real Wealth is to wait until commercial property values find their floor, as we believe values are still uncertain and in some cases, a free fall. We expect to be more active in underwriting commercial property sometime in mid to late 2023. Meantime, we are focused on acquiring single-family homes in both cash flow and growth markets. With in

In this Real Estate News Brief for the week ending December 31, 2022... we say goodbye to a difficult year for real estate and hello to a new year that's filled with opportunity. You'll also hear about changes to retirement account rules, what happened to builder confidence in 2022, and what one institutional investor thinks of single-family rentals. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week that includes significant changes to how taxpayers save for retirement. The changes are part of the SECURE ACT 2.0 which was written into the $1.7 trillion federal spending plan just approved by Congress and President Joe Biden. Some of the more than 90 changes will take effect right away, while others will be implemented in later years. One of the biggest changes is an increase in the age that triggers mandatory minimum distributions, or RMDs, from tax-deferred accounts. Starting January 1st of this year, the age rises from 72 years old to 73 years old. It rises again in 2033 to 75 years old. The new rules also reduce the penalty for failing to take the required RMDs from 50% to 25% or 10% if the situation is corrected in a "timely manner." Those changes are effective immediately. There are also changes to early withdrawal rules that will go into effect next year. They currently allow 401k withdrawals before the age of 59-and-a-half for an "immediate and heavy" financial need, but there's a 10% tax penalty along with income tax on withdrawals. Under the new rules, taxpayers can withdraw up to $1,000 a year and self-certify that it's for a personal or family emergency. Plus, there will be no penalty for the early withdrawal. Under the new rules, employers will be required to automatically enroll employees in 401k or 403b plans. That will take effect in 2025. There are also changes to the amount that workers are allowed to contribute which take effect immediately. Contributions will start with a minimum of 3% to a maximum of 10%. From there, they will rise 1% each year until they reach a range of 10% to 15%. This is supposed to help people save more for retirement. There are many other changes. You'll find a link in the show notes to a nasdaq.com article that covers the more significant ones. (1) Back to economic news and the latest unemployment report. Initial claims were 9,000 applications higher last week to a level of 225,000. Continuing claims were up 41,000 to 1.71 million. That's the highest level since last February and shows signs of a cooler job market, but the data is not an indication of major layoffs. Economists do expect the job market to soften more if the Fed continues to increase short-term interest rates. The unemployment rate was 3.7% in November. The Fed is expecting it to rise to 4.6% over the course of this year. (2) Pending home sales are down again. The National Association of Realtors say they fell 4% in November to their lowest level since April of 2020. The year-over-year rate shows a decline of 37.8%. Potential sellers are putting off plans to list their homes, thanks to high prices for new homes and the high price of a mortgage. (3) Those high prices are coming down a bit, however. The Case-Shiller national index shows that October home prices were down .3%. The 20-city index was down .5% with a year-over-year reading that dipped below 10%. That index is now at an annual home price growth rate of 8.6%. A different report on home prices from the Federal Housing Finance Agency shows that home prices were flat in October. The agency reports an annual increase of 9.8%. (4) Mortgage Rates Although mortgage rates have been coming down, Freddie Mac reports that the 30-year fixed-rate mortgage was up 15 basis points last week to an average rate of 6.42%. The average 15-year is currently at 5.68%. (5) In other news making headlines… 2022 Decline in Builder Confidence The National Association of Home Builders is highlighting stories that have attracted the most reader attention, and one of them is the housing market turning point that happened in April of last year. That's when the NAHB's Housing Market Index confirmed that higher home prices, construction costs and interest rates were making homes less affordable and builders less confident about selling them. (6) This NAHB's monthly confidence level ended the year with a reading of just 31 in December. That's down from 84 in December of 2021. Anything below 50 is considered negative. The current reading is the lowest it's been since the middle of 2012. There is some upside to this story. Builders say that lower mortgage rates and slower price growth is luring buyers back to the market. Investors Prep for 2023 SFR Demand The single-family rental space is attracting another big player. Global commercial real estate firm Newmark is formalizing its Single Family Rental group. The press release says that the

California is eliminating a substantial subsidy for people who add solar panels to their homes and businesses. The new policy will reduce the amount of money that utilities are required to pay to homeowners who pump surplus electricity back into the grid. There's now concern that the decision will hurt the solar industry in California, and potentially other states that may follow California's lead. State regulators say the old policy is outdated, and the new one paves the way to the future. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The five-member California Public Utilities Commission voted unanimously in favor of the proposal. They say it will promote grid reliability and distribute the cost of maintaining the grid more equitably, while incentivizing the use of rooftop solar with battery storage. CPUC Commissioner Clifford Rechtschaffen says: "The decision strikes the right balance between many competing priorities and advances our overarching goals of ensuring California meets its climate and clean energy goals equitable." (1) New Policy Reduces Solar Incentives There are currently 1.5 million homes, businesses, and other utility customers with rooftop solar. They will see no changes under the updated policy. CPUC officials call it the modernized version of the Net Metering Energy solar tariff or NEM. The original Net Metering rules were adopted way back in 1995. But starting next April, the new policy will go into effect and reduce the amount that utilities pay solar customers for excess electricity by as much as 75%. Commissioners say the lower rates reflect the true value of solar electricity which is produced during the day when electricity is cheaper. Electricity becomes more expensive in the evening when the sun isn't shining and people come home and turn on their appliances. They say the cost of electricity in the evening can be 20 times what it is during the day, and puts tremendous strain on the grid. Debate Over the Impact of the New Policy The debate over the change to the solar cost structure has played out for a couple of years. Solar advocates say the new policy will discourage many people from installing solar because it will be that much more expensive. Woody Hastings at "The Climate Center" says: "California needs more solar power, not less." Executive Director of California Solar & Storage Association, Bernadette Del Chiaro, says: "For the solar industry, it will result in business closures and the loss of green jobs. For middle class and working class neighborhoods… it puts clean energy further out of reach." (2) Energy research firm Wood Mackenzie released a report earlier this year that says the changes will lead to a 50% reduction in California's solar market by 2024. They could also impact California's transition to 100% renewable energy by 2045. (3) On the other hand, the group Affordable Clean Energy for All, which is funded by California utilities, says that the current system is outdated, and that millions of non-solar customers are paying an unfair amount for grid maintenance. Advocates for low-income families who can't afford solar also say it's time that solar customers pay their fair share for their use of the grid. State officials at the public advocate's office put a positive spin on the new policy. They say it shows that California has succeeded in its goal to expand the use of solar power. Matt Baker says: "We have outgrown the subsidies for a solar-only system and now it's time to pivot to solar plus storage." CPUC Encourages Solar Plus Battery Storage The new policy encourages the installation of a battery to store extra power so grid energy isn't needed when the sun goes down. That could help reduce the strain on the grid during peak hours, especially during hot summer afternoons and evenings when people turn up their air conditioners. Battery storage will also allow solar customers with extra energy to pump solar power into the grid when rates are higher, increasing the value of the electricity they produce. The CPUC says there will be a big difference between peak and off-peak rates. The policy also raises the maximum size allowed for a rooftop solar system to 150% of a customer's energy use. With an oversized system, there would be more potential for excess energy production in the near term. Over the long term, a larger system will accommodate the expanded use of solar for electric vehicles and other appliances. Customers with battery storage can also earn energy credits. Low-income families and disadvantaged communities that install solar with a storage system would qualify for an even larger share of those credits. New Policy Energy Savings The CPUC says the average residential solar customer will save about $100 a month under the new rules, and about $136 a month with a battery storage system. They say the savings will make it possible to pay off a new system in just 9 year

In this Real Estate News Brief for the week ending December 24th, 2022... we have the latest report on inflation, a surge in all-cash home purchasing deals, and the results of a survey on real estate as a wealth builder. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and a new report that shows inflation is cooling off. The Commerce Department says the Personal Consumption Expenditure index shows that prices rose just .1% in November. That brings the annual rate of inflation down from 6.1% to 5.5%. The core rate, which eliminates food and gas prices, was up .2% with an annual rate that dropped from 5% to 4.7%. The PCE index is the gauge preferred by the central bank because it takes into account changes in consumer behavior to compensate for high prices. (1) Some economists believe that the good news on inflation will soften the Fed's plan to continue with rate hikes. Fundstrat equity strategist Tom Lee is predicting a "massive collapse" in inflation. As reported by CNBC, Lee believes that inflation is currently operating near the Fed's long-term goal of 2%, and that could prompt the Fed to slam on the brakes when it comes to rate hikes. (2) The job market is still fending off the impact of a slowing economy. Initial claims were only slightly higher last week, to a total of 216,000. That's only 2,000 claims higher than the week before. The number of continuing claims was unchanged at 1.67 million. (3) November was a good month for new home sales. They were up 5.8% compared to October. Year-over-year, they're still down 15.3%. Analysts say that November sales rose despite high mortgage rates thanks to builder incentives such as mortgage rate buy-downs and home price reductions. (4) New home construction was down in November, along with housing permits and builder sentiment. The Commerce Department reports that housing starts were down .5% following a 2.1% drop in October. Starts were down much more which means fewer new homes in the pipeline. They were down 11.2% in November. For single-family homes, housing starts were down 4.1% and permits were down 7.1%. For multi-family buildings of four or more units, starts were "up" 4.8% but permits fell 17.9%. (5) Builder sentiment fell again in December as it has done for every other month this year. But as MarketWatch reports, builders see a silver lining. They've had a tough time finding buyers, but mortgage rates have been coming down from the 7% level, and buyers are trickling back into the market. Builders are also offering incentives, as I mentioned, to sweeten the deal. (6) Existing home sales continue to slump. They were down in November for the 10th month in a row. The National Association of Realtors reports a 7.7% decline to a seasonally adjusted annual rate of 4.09 million. Existing-home sales have now dropped almost 37% since March. The last time they were this low was in May of 2020. Before that, it was November of 2010. (7) Mortgage Rates The 30-year fixed-rate mortgage continues to slowly deflate. According to Freddie Mac, the average rate was down another 4 basis points last week, to 6.27%. The 15-year mortgage went in the opposite direction. It was up 15 basis points to 5.69%. (8) In other news making headlines… New High for All-Cash Purchases High interest rates are turning more affluent home buyers into all-cash buyers. Redfin says the all-cash deals have gone up from 24.7% last October to 31.9% this last October. (9) Redfin analyzed 39 of the largest U.S. metros for this data. Most of the all-cash deals happened in Florida with Jacksonville topping the list at 50%. Other top metros for cash sales were West Palm Beach, Cleveland, Cincinnati, and Atlanta. The lowest number of all-cash offers happened along the West Coast where home prices are more expensive. Real Estate as a Wealth Builder A new CNBC survey shows that real estate is the most popular way to build wealth, but that many Americans are not acting on those beliefs. According to the survey, 23% of Americans believe that investing in real estate is the best way to create wealth, but only 12% of them purchased real estate in 2022. Instead, 27% of the people who responded put money into the stock market. Financial experts say that the cost of real estate is what keeps many Americans from doing what they believe is best. Real estate can be a more secure investment over the long-term, but it also requires a bigger initial investment. If you'd like to learn more about how you build wealth with real estate, please join RealWealth. It's free to join at newsforinvestors.com and learn more about how to pay for your real estate investments. You'll also find links to other topics mentioned in the show notes of this episode. Please remember to subscribe to our podcast, and leave a review! Thanks for listening, and Happy Holidays! Links: 1 - https://www.mark

Rent growth has been slowing down in step with the economy, but it's still running hotter than it was before the pandemic. And that's expected to encourage more jurisdictions to consider and or pass rent control legislation. Even Florida is turning towards rent control as an answer for high rents. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. As Bisnow reports, rents remain "painfully high" for many Americans, despite slower rent growth for both single-family and multi-family rentals. (1) Year-over-year single-family rent growth hit a high of 13.9% in April of last year, but has been slowing down for the last five months. It's still in the double digits, but is now 10.2%. Florida metros have seen the highest SFR rent growth with Miami and Orlando at the top of that list. (2) It's a similar situation for apartments but rent growth has come down further. Annual rent growth hit a record high of 17.6% in 2021. It's now down to 4.6% year-over-year, although that's still a healthy gain for landlords. (3) Rent Growth vs. Wage Growth Because rent growth has outpaced income, many households are finding it more difficult to pay their rent. According to the U.S. Census Bureau, more than 19 million renter households paid more than 30% of their income on housing from 2017 to 2021. That's defined as "cost-burdened" by the Department of Housing and Urban Development. Housing costs vary from market to market, but the National Multifamily Housing Council, which advocates "against" rent control, has identified a number of markets that could become rent control battlegrounds in the coming year. These markets are identified in the NMHC's 2023 Rent Control Outlook report. (4) Four Rent Control Risk Levels The report separates the potential for rent control activity into four categories. Tier one includes states where "active state or local legislation action is expected." Those states include: Colorado, Illinois, Florida (which has been notoriously opposed to rent control), Maryland Massachusetts, Nevada, and Washington State. Tier two includes states where the potential for state or local legislative activity is "elevated." Those states include Connecticut, Hawaii, Michigan, New Mexico, and Rhode Island. Tier three includes states where rent control activity is expected, but will probably not get approved. Those states include Arizona, Kentucky, North Carolina, Pennsylvania, and South Carolina. The last category is where rent control expansion is an ongoing threat. California and New York are among those states, of course, along with Maine, Minnesota, New Jersey, and Oregon. Rent Control Minefield for Investors Rent control can be a minefield for investors, especially if they purchased a property under one set of rules, and then the rules change. It costs money to run a rental business, and when rents are controlled, rent revenues suffer. Investors may be less likely to put money into rentals, which could impact repairs on existing rentals and/or reduce the overall supply and make it harder for renters to find housing. A cap on rents could also reduce the value of the property. Bisnow cites a study published in October by Duke Financial Economics Center. It found that property values declined 6% in St. Paul, Minnesota during the first three months after rent control was implemented last year. That's for all rental and non-rental properties. For rental properties alone, values were down an additional 6% to a total of 12% due to lower future rents. The report says that lost property value essentially transferred that value from the owners to the renters. White House Silent on Presidential Executive Order While the NMHC anticipates activity at the local and state levels, some rent control advocates are floating the idea of an executive order by President Joe Biden that would impose some sort of rent control. So far, the White House has been silent on that matter. It did enact a housing plan in May that would "ease the burden of housing costs" but that plan did not include rent control. It just offered general policy proposals that include zoning reforms, new kinds of financing, and federal dollars for affordable housing. As what might be seen as a follow-up to this, a coalition of more than 2,500 nonprofits and public agencies wrote a letter to Congress asking for affordable housing legislation. The letter is addressed as a "Call to Invest in Our Neighborhoods" or ACTION. Specific requests in the letter call for a 50% expansion of the Low-Income Housing Tax Credit and a lower Private Activity Bond financing threshold of 25%. It is currently at 50%. According to a Realtor.com survey, 70% of landlords said in October that they plan to raise their rents over the next year. That is down from about 72% last spring. You'll find links to the reports I mentioned in the show notes at newsforinvestors.com. You can also join RealWealth for free while you are

In this Real Estate News Brief for the week ending December 17th, 2022... the Fed's latest rate hike, a 2023 top market forecast, and where you can "live like a hobbit" on Airbnb. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. As I mentioned in an update a few days ago, the Fed hiked short-term rates once again. This time, it was a half point increase. The previous four increases were three quarters of a point. That brings the federal-funds rate up to a range of 4.25% to 4.5%. The Fed's effort to stop inflation is expected to go as high as 5.25%. Several Fed officials expect rates to go even higher. Fed Chief Jerome Powell says of the need for more rate hikes: "We're going into next year with higher inflation than we thought." This is expected to increase the risk of a recession. (1) The Fed's decision on rates came a day after the latest report on consumer prices. The Labor Department reported that the Consumer Price Index or CPI only rose .1% in November. That brings the annual rate of inflation down from 7.7% in October to 7.1% in November. When you omit prices for food and fuel, the core rate was up .2% to an annual rate of 6%. Digging in a little deeper, you'll see that some price categories are still seeing high inflation, such as rents. They were up .8% in November. The good news is that prices are not rising as fast as they were, but the Fed doesn't expect to get inflation down to pre-Covid levels of 2% until 2024 or 2025. (2) CoreLogic released its latest report on home price growth, which shows that annual gains are down to 10.1%. That's the slowest annual gain since early 2021, although some metros are still seeing a high rate of growth. The states of Florida, South Carolina, Georgia and North Carolina are seeing the biggest home price gains right now. The city of Miami is at the top of the metro list with an annual gain of 22.6%. Tampa is a close second at 20%. (3) The job market is holding up. As MarketWatch reports: "Layoffs have increased, but job losses remain small." Initial claims were 20,000 lower last week to an 11-week low of 211,000. They've slowly risen from a 54-year low of 166,000 last spring. Continuing claims are also slowly rising. They were up by 1,000 last week, to 1.67 million. (4) Mortgage Rates Mortgage rates have been coming down a bit as the rate of inflation weakens. Freddie Mac says the average 30-year fixed-rate mortgage is down 2 basis points to 6.31%. The 15-year is down 13 points to 5.54%. It's not enough to boost demand however. Freddie says it remains "very weak." (5) In other news making headlines… Where Are the Hot 2023 Housing Markets? Realtor.com came out with a top ten list of housing markets for 2023, and it looks like the South to Southeast part of the country will be in the lead. Atlanta is at the top of the list. As the so-called "New York of the South, it has the highest potential for growth, according to the National Association of Realtors. It is also more affordable compared to similar cities. NAR says that 20% of Atlanta renters can afford to buy a median-priced home. That's higher than the national average. (6) Raleigh, North Carolina is second on the list, followed by Dallas-Fort Worth, which is one of our preferred markets for single-family rentals. We also like Huntsville, Alabama; Jacksonville, Florida; and San Antonio, Texas which are 7th, 8th, and 9th on the list. We'll have a link to the complete list in the show notes. The City where Building Permits Take Almost 2 Years! If you've ever had to wait weeks or even months for a building permit, you probably weren't trying to build something in San Francisco. The Chronicle did a little research on permit-approval time and found that the typical waiting period was 627 days, or very close to "two years"! And that doesn't include the time it might take to deal with an earlier planning approval stage which can take up to a year or more. According to Corey Smith of the Housing Action Coalition: "It just proves what we know: that San Francisco doesn't prioritize building new housing." The report comes in the midst of a state review for the city's permitting process. The city's Department of Building Inspection also responded to the report saying that it is currently making changes that will speed up the process, but it won't be known for some time as to how much. (7) The Airbnb That Lets You "Live Like a Hobbit"! Airbnb is offering a unique stay at the original "Hobbiton" in New Zealand. That's where filming took place for "The Hobbit" and "Lord of the Rings." It's been open for tours for years, but the owner of the property is opening it up for 3-night stays next March to celebrate the 10th anniversary of "The Hobbit: An Unexpected Journey." Guests will be accommodated in one of 44 hobbit holes and experience life in The Shire. You must be at least 18 years o

Blackstone is defending its decision to limit withdrawals from its $69 billion dollar real estate fund as investors become more cautious about what's ahead. Fund managers say that redemption requests for the Blackstone Real Estate Income Trust, or BREIT, exceeded previously set limits, and that investors knew there would be only so much liquidity to pay existing investors. The only way to create more liquidity is to sell properties, and that doesn't happen overnight. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Blackstone chief, Stephen Schwarzman, says the fund is performing well, and the high number of redemption requests are mostly from Asian investors who are facing financial stress in Asia. But there's also growing concern about commercial real estate valuations here in the U.S. with weakening demand for office space and the impact of the Fed's interest rate hikes on the economy. Apartment rent growth is also slowing down, despite strong housing demand, and multi-family properties account for the lion's share of Blackstone's fund. The Blackstone website says that 55% of fund assets are multi-family properties with a high concentration of properties in the western half of the U.S. and the south to southeast states. Industrial properties make up about 23% of the fund. Other fund assets include net leasing, data centers, hospitality, self-storage, office space, and retail. The fund is up 9.3% year-to-date and 13% since its inception. (1) Blackstone Sets Limits on Withdrawals These new withdrawal limits come as investors pull money from all the REITS, including publicly-traded REITs. CNBC reports that publicly-traded REITs have gotten "slammed" this year. The $35 billion Vanguard Real Estate ETF is down 26% year-to-date. (2) The Wall Street Journal cites the FTSE NAREIT All Equity REITs INdex which tracks publicly-traded landlords. That index shows a 20% drop. It reports that office owners are seeing worse results. (3) Although the privately-traded Blackstone is still "up" by more than 9% for the year, The Wall Street Journal reports that redemption requests for private REITs have escalated. The article said they are 12 times higher than they were in Q3 of last year. They hit $2.9 billion in Q2 of this year, and $3.7 billion in Q3 which they typically are less than a total of $1 billion. Although the Blackstone chief identified Asian investors as the ones who are yanking their funds, the Wall Street Journal reports that pension funds and university endowments are poised to do the same. BREIT Shows Strong Fund Performance Although Blackstone saw a doubling of requests last month, COO Jon Gray cited the fund's strong performance in an interview with CNBC. Gray suggested that investors should be saying: "You guys have done an incredible job at deploying our capital in exactly the right geography, in exactly the right sectors with the right balance sheet." He says: "We set up the product with limitations on liquidity. We described it as semi-liquid because we knew at some point there would be a period of volatility, and we didn't want to sell assets at the wrong time under pressure." Blackstone has a 5% cap on quarterly redemptions and a 2% cap for any given month. But Gray says: "We can sell if needed" which, he says, gives fund managers a lot of confidence. And despite the volatility we're seeing in the housing market right now, Blackstone fund managers feel confident about their approach to real estate. The website boast all s that BREIT is the world's largest commercial real estate owner… that has outpaced inflation drive by a high conviction, and thematic investment approach. The website says: "BREIT's performance is more closely tied to real estate fundamentals than publicly traded REITs which are often subject to public market volatility." Rick of Too Many Redemption Requests Although Blackstone is feeling some of the volatility, the Journal reports REITs in general are concerned about the number of redemption requests. It reports: "If the number of investors asking for their money back keeps growing, it would likely become a problem for the real-estate market. That is because funds that need to raise cash to pay back their investors often and no other choice but to sell buildings." And that could put pressure on apartment rents and office values over the long term. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! To find out more about the single-family rental markets, go to newsforinvestors.com. You can join for free and get access to our market data and our list of real estate professionals. That includes our experienced investment counselors that can answer questions and help you get where you want to go with real estate. Thanks for listening. I'm Kathy Fettke. LInks: 1 - https://www.breit.com/why-breit/ 2 - https://www.cnbc.com/2022/12/08/blac

In this Real Estate News Brief updated to December 14, 2022… the Fed hikes short-term rates once again, two inflation reports show signs of improvement, and a video game called "The Tenants" showcases the job of a landlord. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin economic news with another rate hike by the Fed as it tries to control inflation. Fed officials decided on a half point rate hike, as most economists expected. That's lower than the last four three-quarter point rate hikes, and puts the Federal Funds rate between 4.25% and 4.5%. Fed officials also indicated that they would keep rates high throughout 2023, so any reduction in the overnight lending rate wouldn't happen until 2024. (1) Fed officials had just received the latest report on the consumer price growth the day before. The Labor Department reported that the Consumer Price Index or CPI was only up .1% in November to an annual rate of 7.1%. That's down from an annual rate of 7.7% in October, and 9.1% in June. So it's come down a full two points in four months. The core rate, which omits food and fuel, has also fallen from 6.3% to 6% over the last year. A report on wholesale prices came out the week before showing a higher than expected monthly increase in the Producer Price Index or PPI. It was up .3% in November which puts the annual rate at 7.4%. Despite the monthly increase, the yearly rate has come down from a peak of 11.7% in March to 7.4% today. (3) The job market is slowly cooling off in response to the Fed's rate hikes. There were 4,000 more initial claims this last week for a total of 230,000 new claims. Last spring, initial claims were as low as 166,000 when the economy was still roaring back to life. The Fed's rate hikes are forcing companies to trim their workforce a bit. There are now a total of 1.67 million people collecting benefits. (4) The stock market's response to economic conditions, including rate hikes, have resulted in a steep loss of individual net worth. The Federal Reserve reports that nominal net worth was down almost $7 trillion during the first three quarters of the year. It dropped 4.6% to a total of $143.3 trillion. If you include the loss of purchasing power because of inflation, you get real net worth which has suffered about twice the loss. Total real net worth is about $13.5 trillion. (5) Despite the resort on net worth, consumers are feeling a little less worried about inflation. The University of Michigan says its consumer sentiment index rose almost three points in December, to a reading of 59.1. Economists didn't expect such a positive response. They think lower gas prices have helped make consumers feel more at ease about inflation. (6) Mortgage Rates Mortgage rates are down for a fourth week in a row. Freddie Mac says the average 30-year fixed-rate mortgage was down 16 points to 6.33%. The 15-year dropped 9 points to 5.67%. Rates breached the 7% mark in early November. The rapid decline since then is the fastest since 2008. (7) And some of our Real Wealth members are getting investor loans in the 5% range, because sellers have been willing to pay points to bring down the rate. With builder's discounting property and offering rates in the 5's, cash flow is back to 2019 levels on new homes. Find out at RealWealth.com. In other news making headlines... Big Decline in Listing Volume More and more home sellers are sitting on the sidelines. According to House Canary, the volume of new listings has declined for seven months in a row, and is now down 25.1% year-over-year. Listing removals have climbed even higher, to 64.3% compared with November of last year. Many buyers and sellers have put their plans on hold because of high interest rates, and other economic factors. Economists expect to see more of the same as we head into the new year. Top State for Homebuyers Millennials who aren't postponing their homebuying plans are ditching New York, Los Angeles and Chicago for other hot metros in Texas and Florida. A new study by SmartAsset shows four of the top ten millennial destinations are in Texas and Florida. Austin moved up from fourth place last year to the top spot this year. Denver is second on the list followed by Dallas. Raleigh, North Carolina is fourth, and Jacksonville, Florida is fifth. The other top five cities are Henderson, Nevada; Salt Lake City; Virginia Beach; Tampa; and Nashville. (8) The cities that are seeing the biggest outflow of millennials are New York, Chicago, Washington, D.C., Boston, and Los Angeles. San Francisco is also among those losing a lot of millennials. A study by Redfin on cities getting the highest number of searches also includes Tampa and Dallas, but Sacramento, California was at the top of that list. Several other Florida cities are also on the Redfin list including Orlando, Miami, Cape Coral, and North Port-Sarasota. (9) "The Tenants" Video Game A new video g

In this Real Estate News Brief for the week ending December 3rd, 2022... new limits for 2023 conforming loans, the hours tenants need to work to pay rent, and a single-family rent growth slowdown that's still good news for landlords. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. The inflation gauge favored by the Fed showed a bigger drop in price growth, but a report on job creation and wage growth showed that the economy is still running too hot. The Personal Consumption Expenditures Index or PCE shows a .2% increase for the October core rate which is down from a .5% rate of growth in September. The current annual rate is now 5.2% for the PCE core rate which excludes food and gas prices. The improvement suggests that inflation is stabilizing. (1) The government also released a report that shows stronger-than-expected job growth in November and a sharp increase in wages. That's good for workers, but a hot job market contributes to inflation. The report shows that companies added 263,000 new jobs in November – Wall Street had forecast around 200,000 – and that wages surged .6% to an average of $32.82. As MarketWatch reports, that's the largest increase in 13 months. The unemployment rate was unchanged at 3.7%. (2) Initial jobless claims were lower. There were 16,000 fewer applications to a total of 225,000 initial claims. That was also a surprise. Economists had expected a much bigger decline. The number of ongoing claims did move higher, however, to the highest level since last February. They rose 57,000 to a total of 1.61 million. Economists say that unemployment numbers can also be difficult to interpret during the holiday season. (3) Meantime, Fed Chief Jerome Powell spoke at the Brookings Institution on Wednesday. He said that the central bank may decide to slow the pace of interest rate hikes at the upcoming meeting but he also warned that the terminal rate may go higher than originally anticipated which means smaller rate hikes for a longer period of time. He said the Fed needs to see clear evidence that inflation is declining, including lower prices for housing. Some economists are now predicting a half-point rate hike at the December meeting, followed by three (3) quarter-point rate hikes next year. That would bring the short-term rate to a range of 5 to 5.25%. Powell said during his speech: "The truth is that the path ahead for inflation remains highly uncertain." (4) The housing market continues to cool, with existing home sales down 4.6% in October. According to the National Association of Realtors, it's the fifth month in a row they've been down. Year-over-year, pending home sales are down 37%. Home sales have stalled for several reasons including high prices and rising mortgage rates. (5) Home prices have started to come down. The S&P CoreLogic Case-Shiller national price index was down .8% in September. Year-over-year prices still show a 10.65% rate of appreciation however. (6) Mortgage Rates Mortgage rates are coming back down. Freddie Mac says the average 30-year fixed-rate mortgage dropped 9 points to 6.49%. The 15-year was down 14 points to 5.76%. Freddie attributes the decline to optimism that the Federal Reserve will move more slowly with the rate hikes. (7) In other news making headlines… Conforming Loan Limits for 2023 The government released new higher limits for 2023 conforming loans. The new amount that borrowers can get for loans guaranteed by either Fannie Mae or Freddie Mac will run from a base amount of $726,000 to more than one million dollars. More expensive counties will qualify for higher amounts with the highest tier at $1,089,300. (8) The Federal Housing Finance Agency regulates Fannie and Freddie and has published a county-by-county list with conforming loan limits. (9) The limits are based on average home prices in each area. If home prices fall, the loan limits will not be reduced but they will not be increased again until home prices move above the current conforming loan amounts. Hours Worked by Tenants to Pay the Rent A new analysis shows that tenants are working more hours to pay their rent. Research by Zillow shows that a typical full-time employee must work about 63 hours to pay the average rent of $2,040. That's about 36% of the average tenant's paycheck. Anything above 33% is considered "rent-burdened." (10) The situation is the result of robust rent growth and wages that are not rising as fast as rents. Labor statistics show the average hourly wage has grown 23% over the last five years and that rents have gone up about 37%. Rent Growth is Slowing for SFRs Data shows that rent growth is slowing down. According to CoreLogic, which tracks single-family rent growth, year-over-year rents were down for a fifth month in a row but were still at double digits. The data shows the annual single-family rent growth was 10.2% in

Investors often use this strategy and now some housing activists are doing the same, hoping to beat investors with cash offers. It's the cash offer on a home that often gives investors an edge, and one activist group in Milwaukee is hoping to level the playing field with funds to buy homes in cash that it will then sell to low-income families. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Act Housing is a nonprofit organization that wants to give low-income families an opportunity to buy homes that are often scooped up by investors with cash offers. The Wall Street Journal is calling them "activist house flippers." In this case, the group would flip the homes for a minimal profit because it would sell them to families for close to the cost of the homes. (1) Housing Acts In Fundraising Mode The group hopes to raise $10 million by next year from the government and other groups that provide philanthropic funding. The activists spearheading this project say they are "leveling the playing field" because many sellers prefer cash offers and this provides a way for investors and future homeowners to compete at the same level. The group's president, Michael Gosman, explained the situation with a question: "If a family is willing to pay the same amount for a property as an investor, how do we make sure that family actually gets that opportunity." Acting on behalf of a homebuyer, the group would make a competitive all-cash offer. Targeting Bungalow-Style Homes The group is targeting smaller bungalow-style homes that might cost about $75,000 to purchase, and another $25,000 to renovate. It already has more than 100 families signed up as potential buyers. More than 80% of them are people of color. According to the Wall Street Journal, this is more of a nationwide trend, with activist groups in other places using a similar strategy. It reports that a neighborhood activist in Jackson, Mississippi, is flipping homes to first-time buyers. A nonprofit in Memphis is also doing this. In the Cincinnati area, the Port of Greater Cincinnati Development Authority recently beat Wall Street investors in the purchase of almost 200 rental homes. And in California, lawmakers set aside half a billion dollars to help subsidize the purchase of homes and rentals by nonprofits that help families with affordable housing. Investors Bought 1-in-5 Homes in Q1 Investors have been busy expanding their portfolios of single-family rentals. During the first quarter of this year, investors bought more than 20% of the homes that were sold. And many of those homes were converted into rentals. Investors have pulled back on their purchases since then, because of market conditions, but a pullback is also typical for this time of year. Despite the outcry over the investor purchase of homes that are turned into rentals, there's a huge need for rentals. Families given the opportunity to buy these homes may still be unable to qualify for a loan, so they will still need to rent. Some families also prefer to rent. For those that hope to buy in the Milwaukee area, they may get help from this new Housing Acts group. Gosman is hoping to find homes to flip using the same techniques that investors use, like fliers on phone poles and mailers. He told The Wall Street Journal: "I think in a lot of cases we'll copy (the investors.)" There will be no lack of competition however. Real estate is a hot deal for everyone whether you are a future homeowner or an investor trying to build generational wealth. In addition to the purchase of existing homes, many big landlords are funding huge build-to-rent projects. JPMorgan is one of them. It has entered into a joint venture with Haven Realty Capital to spend $1 billion on hundreds of new build-to-rent homes starting with three projects in the Atlanta area. (2) You'll find links to the Wall Street Journal article in the show notes for this episode. You can also find out how to find deals as an investor by joining RealWealth. It's free to join and gives you access to our market data, our experienced investment counselors, and our curated list of real estate professionals. And please remember to subscribe to this podcast if you haven't already, and leave us a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.wsj.com/articles/activist-house-flippers-take-on-wall-street-to-keep-homes-from-investors-11669686997?mod=lead_feature_below_a_pos1 2 - https://www.businessinsider.com/jp-morgan-to-acquire-1-billion-of-single-family-rentals-2022-11

There's still time to get in on an affordable real estate deal that also gives you Portuguese citizenship, access to affordable, state of the art healthcare, university education in Europe, and easy access to Europe. Portugal's Golden Visa program encourages foreign real estate investment in exchange for citizenship, and the minimum investment is just €280,000 which is about $280,000. But the opportunity might not last forever. The Portuguese government is in the process of making a decision on whether to end the program but anyone already signed up will be grandfathered in! Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Portugal's Golden Visa Program Portugal's Golden Visa program has been around since 2012. It was created to help Portugal recover from the worldwide economic downturn during the Great Recession. It encourages foreign investment and because the Euro is currently on par with the dollar, U.S. investors are getting a big discount from prices that are much lower over there. Because the program has attracted heavy investment into residential properties in the most popular areas, the government is now limiting the program to commercial properties in those areas. But these properties consist of rooms, suites, and even apartments in luxury hotels and resorts that provide passive income, and a place that investors can use when they are in Portugal. I went to Portugal this year to find out more about the Golden Visa program, and met with a team of experts, including attorneys, CPA's and developers who have properties that meet the Golden Visa requirements. You can find out more about the teams we met with at www.gatewayportugal.com. (1) What You Can Buy With Gateway Portugal Some qualifying properties offer apartments in luxurious resorts with old world surroundings and five-star service. They range in price, returns, and the amount of time that owners get to use them. Some of the properties offer buybacks after five years. Investors will get five years of passive income, a set amount of time to use and enjoy the property, and the big prize – Portuguese citizenship. The Golden Visa program does come with a few additional fees, but the returns that the investor makes will easily cover those fees. One of the least expensive investments being offered by Gateway Portugal is a hotel suite for €220,000. It's located along the beach in the very popular town of Lagos. Investors would earn a 7 to 10% return per year depending on occupancy levels. The owner would get to use the suite for two weeks every two years. However, to qualify for the Golden Visa, a minimum of $280,000 would have to be invested in Portugal, which means investors would need to buy two of these suites to qualify. Minimum Investment Only About $280,000 One thing to keep in mind is the amount of the investment that qualifies you for the Golden Visa program. There are three tiers with minimum investment amounts of €280,000, €350,000, and €500,000. Those correspond to the locations and types of investments that qualify. The first bracket of 280k to 350k investments get you a renovation project in a less densely populated area. The buildings that qualify as renovation projects must be a building that is at least 30 years old. 350k to 500k gets you a renovation project in a more densely populated area such as Lisbon, Porto, or the Algarve. 500k and up gets you a new build in a more densely populated area. Once you invest, you get immediate residency. To maintain your residency, you will have to spend some amount of time in Portugal, but that requirement is minimal. The first year, you have to spend at least a week in Portugal. After that, you can spend two weeks every two years. When you hit the five year mark, you are eligible for citizenship, so long as you have kept your investment during that time. Immediate family members are also eligible for citizenship if they were included on the application. Children must be younger than 18 at the time of the application or attending school with the support of their parents. Grandparents are also eligible. Beautiful Country, Low Cost of Living, High Quality Lifestyle What a great way to experience Europe, as a citizen in a beautiful country with a low cost of living and a high quality of life! Portugal's health care system is considered world class. In 2019, the World Health Organization published an extensive ranking of healthcare systems around the world. Portugal ranked 12th on the list. That's way ahead of the U.S. which was 37th on that same list. Health care isn't totally free but it's free for kids under 18 and adults over 65 and is extremely affordable for the rest. For example, hip replacement surgery might cost about $40,000 in the U.S. but will only set you back with a minimal co-pay in Portugal. Housing is also a lot cheaper in Portugal. The globalcitizensolutions.com website says it's about 50% less expensiv

In this Real Estate News Brief for the week ending November 26th, 2022... what the Fed is expected to do next, what investors did not do in the third quarter, and a new rent growth report. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with a light week for economic news as most of us enjoyed a day with family and friends for Thanksgiving. But there are a few things to report. The Federal Reserve released the minutes of its last meeting which shows that most of the voting members feel it's appropriate to reduce the size of the rate hikes. They feel that aggressive measures are still needed, but that smaller hikes will give them an opportunity to evaluate the economic impact. They are hoping to avoid what they call a "hard landing" as they tighten the reigns on the money supply. Economists are now expecting a half point rate hike at the meeting in December. That's after four consecutive three-quarter point hikes. (1) The Fed is hoping to control inflation without hurting the job market and causing layoffs. This last week, jobless applications jumped up a little, to 240,000 initial claims, but that's still near a low point. Continuing claims were also up by 48,000 to 1.55 million. Economists do see this slow creep higher as a result of Fed policy. Ian Shepherdson at Pantheon Economics told MarketWatch: "We are increasingly inclined to think that the trend in claims is now rising gently, as firms come under increasing pressure from the Fed's aggressive tightening." (2) The Commerce Department released the latest report on new home sales. It shows a 7.5% increase to a seasonally-adjusted rate of 632,000 in October. And that's with a record-high median price of $493,000. It was $455,000 in September. Some analysts say that home buyers may be rushing to close a sale before homes get any more expensive. As reported by MarketWatch, they also say the report doesn't include data on a high number of cancellations. They expect the housing market will continue to be a drag on the economy for several more quarters. (3) Consumer sentiment sank a bit more in November. The University of Michigan's consumer sentiment survey shows a drop to 56.8 because consumers are worried about inflation and the risk of recession. It was 59.9 in October and 73.6 in October of last year. When asked about inflation, participants said they expect inflation to run at an average of 4.9% next year, and drop down to 3% over the long run. The Fed pays attention to consumer expectations because it can influence future price trends. (4) Mortgage Rates Mortgage rates deflated a bit more last week. Freddie Mac says the 30-year fixed-rate mortgage was down 3 basis points to 6.58%. The 15-year was down 8 points to 5.9%. (5) In other news making headlines... Investor Buying Activity Falls 30% There's really never a bad time to buy real estate, so long as you find the right deal. And right now, it's a bit more difficult to find those deals. So much so, that the investor purchase of residential property dropped a whopping 30% in the third quarter. The Redfin study tracks 40 markets, and the results show that investors purchased around 66,000 homes in Q3 compared to 94,000 in Q3 of last year. But the report also shows that nationally, investors accounted for 17.5% of all home sales in the third quarter. That's a higher percentage than at any time before the pandemic. (6) While investors are facing the same economic headwinds as any home buyer, they are also waiting on the sidelines to jump back in. JPMorgan Chase recently announced that it plans to spend $1 billion on build-to-rent homes. The plan will launch with the purchase of 250 new rental homes in three communities in Atlanta. Rent Growth Slow to 18-Month Low One of the headwinds that investors are facing is a slowdown in rent growth, but it's also important to note that it's a slowdown. Although some rents in expensive areas may be experiencing a small amount of negative rent growth, rents are still rising in most parts of the country. But the slowdown is real.l (7) The Realtor.com October Rental Report shows that nationally multifamily rent growth has dropped to about 4.7% year-over-year. It also found that most landlords are planning to raise rents in the next year by smaller amounts. What's really happening is that rent growth is returning to normal after a period of astronomical rent growth that is no longer sustainable. Single-Family Homes Shrinking in Size The size of new single-family homes could shrink in the coming months, despite a trend for larger homes that began during the pandemic. The National Association of Homebuilders says it's a tug-of-war between demand for more space and a demand for less expensive homes. (8) The average size of a home grew 5.6% since the Great Recession while the median size is 9.7% higher. The NAHB expects that trend to reverse, as homebuyer budgets will pr

In this Real Estate News Brief for the week ending November 19th, 2022... the latest inflation slowdown, what the Fed might do next, and what homebuyers need to earn to buy the "typical home." Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Economic News We begin with economic news from this past week, and another good report on inflation. The government reported on Tuesday that wholesale prices only rose .2% in October. That lowers the annual rate of inflation from 8.4% to 8%. It had been as high as 11.7% in March. That report along with one the week before on the CPI, show that inflation is slowing down, but officials at the Federal Reserve say they are still seeing the need for several more rate hikes. (1) St. Louis Federal Reserve President James Bullard says that the central bank still has a lot of work to do to attain a "sufficiently restrictive level." He even suggested that the Federal Funds rate might go as high as 7% to win the fight against inflation. The Fed has already increased the short-term lending rate from near zero to a range of 3.75 to 4%. Economists are projecting a half point rate hike at the next meeting in early December instead of the three-quarter point rate hikes we've been seeing. (2) Fed officials are trying to slow the economy down and are hoping to do that without hurting the job market, but there's a growing number of tech companies announcing lay-offs. Amazon just announced a plan for 10,000 lay0ffs or about 3% of its workforce. Facebook's parent company, Meta, also announced workforce cuts of about 11,000 employees. That's about 13% of its workforce. Tesla founder Elon Musk, who bought Twitter, slashed that workforce in half with about 7,5000 layoffs. Many people are expecting to see higher unemployment numbers. The jobless rate was 3.7% in October. It had surged to 14.7% in April 2020, because of Covid. (3) Despite the headlines, the number of initial claims for unemployment dropped last week. They fell slightly to a total of 222,000 applications which is considered a low number historically. The number of people who've been collecting benefits was up by about 13,000 to 1.5 million. Because layoffs appear to be increasing, economists say we will probably see unemployment numbers rising in the coming weeks and months. (4) Inflation continues to hit the housing market with prices that many homebuyers can't afford and another drop in existing home sales. The National Association of Realtors reports a 5.9% drop in October sales to a seasonally adjusted annual rate of 4.45 million units. It's the ninth month in a row that sales have declined. Compared to a year ago, sales are down 28.4%. It's currently the lowest sales have been since December of 2011, except for a sharp drop during the pandemic. (5) Home builder sentiment is sliding further into negative territory. The National Association of Home Builders says its monthly confidence index was down another five points in November, to 33. That's the lowest it's been since June of 2012 and is quite a big lower than it was a year ago when the index was at 83. (6) Mortgage Rates Mortgage rates tumbled last week after inflation data suggested that price growth may have peaked. Freddie Mac says the average 30-year fixed-rate mortgage was down 47 basis points to 6.61%. It had risen above the 7% level. The 15-year was also down slightly to 5.98%. (7) In other news making headlines... The Paycheck You Need to Buy a Home Purchasing a "typical home" has gotten so expensive, home buyers need to earn at least six-figures to buy one. A new study by Redfin shows that U.S. buyers need to earn $107,281 a year if they are taking out a loan to buy a median-priced home. That's about 45.6% more than a buyer needed a year ago, while the average hourly wage has grown only about 5%. (8) Nationally, the median-price is just under $400,000. Of course, the price of a typical home varies a lot from market to market. San Francisco and San Jose have the highest home prices, but the annual income needed hasn't grown as much as it has in other markets. There are several Florida metros at the top of that list. North Port, Florida is first on the list with a 74% increase in the annual income needed to buy a median priced home. The median there is about $488,000. The income a home buyer needed in October of 2021 was about $75,000. In October of this year, that figure shot up to $131,000. This list can help an investor determine where large numbers of people might need to be renters because they can't afford to buy a home. You'll find a link to the report with a complete list of metros in the show notes. That's it for today. Please remember to hit the subscribe button, and leave a review! You can also join RealWealth for free at newsforinvestors.com. You'll find lots of information on

What's happening with Airbnb? A Palm Springs superhost recently Tweeted about an unusual drop in bookings which opened a floodgate of complaints from guests. Although Airbnb is more successful than ever, there's growing discontent in at least some markets and the conversation is bubbling over online with comments like (dramatic voice Kathy!) "The Airbnbust is upon us." Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The Tweet about a drop in bookings was quickly picked up by Buzzfeed. It published an article with the title: "Couple Says An Airbnb Host Expected Them to Strip the Beds, Vacuum, And Do Chores, Plus More Stories from People Who No Longer Use the Service." Viral Tweet: Big Drop in Bookings The article posted the tweet from the Palm Springs host who said he's seen a drop in bookings for three to four months. He said his rental went from about 50% occupancy to literally 0%, and wanted to know if other people were experiencing the same thing. He got more than 2,000 replies from people who are no longer enchanted by the Airbnb experience. (1) Buzzfeed listed several of the complaints. They included complaints about additional or hidden fees that jack up the price, the sterile look and feel of cookie cutter Airbnbs, hosts that have a litany of house rules and chores, and a lack of concern for the safety and/or privacy of the guests. One former Airbnb guest said: "It was hard to enjoy our Airbnb cabin in the woods when the host was watching us on his outdoor cameras and reporting on things he didn't like us doing." Another said: "I used to love Airbnb because I'd get a kitchen and I love to cook. But now the cost to stay has gone up so much, and I don't feel as safe in them." One person said she refuses to book with Airbnb saying: "It's disgusting to see empty apartments, condos, and cottages waiting for bookings while people are living in tents." The Washington Post just published an article with the title: "Airbnb is more successful than ever. Why is everyone so mad at it?" In addition to high prices, hidden fees, and a lack of service compared to hotels, Airbnb rentals have often saturated the market with too much supply. (2) Airbnb Is Doing Quite Well Overall But despite the complaints and a booking slowdown in some areas, Airbnb is doing quite well. The Post reports total revenue of $2.9 billion for the third quarter and a 46% increase in profit to $1.2 billion. Total number of bookings increased to 99.7 million which is the highest ever for the third quarter. Guest arrivals also set a new record for more than 90 million worldwide. Boston University associate professor of hospitality Makarand Mody says: "It's ironic the Airbnbust hashtag is going around, given they had their best quarter ever in the company's history. It's a little hard to reconcile the two." Airbnb is also paying attention to that hashtag. CEO Brian Chesky announced changes that would increase pricing transparency. He said that Airbnb would let users see the price totals up front, including nightly rates and all the fees. He's also asking hosts to avoid "unreasonable" requests as part of the rental agreement – things like stripping beds and doing the laundry. Mody says the changes are a step in the right direction, but he says: "They don't solve the underlying problem, which is exorbitant fees in the first place." Cleaning fees are one of the things that add a lot to the price tag, and Airbnb has encouraged hosts to keep them low or not charge a cleaning fee at all. The company says that 45% of listings around the world do not charge cleaning fees. But a spokeswoman for hosts told the Post that cleaning fees have gone up since Covid because of more stringent cleaning protocols. Many hosts are also hiring professional cleaners because of this. Those cleaning fees will now be more visible at the time a guest books the accommodation but it doesn't necessarily mean they will go down. Are There Too Many Airbnbs? Another problem is the sheer number of Airbnbs in some areas. The year-over-year increase in U.S. Airbnbs is 29% from about 850,000 to more than 1.2 million. AirDNA's Jamie Lane says: "There are more listings and more demand, but less demand per listing." And now, Airbnb is also rolling out an easy way for new hosts to list their homes with help from a Superhost. The new hosts will be coached by the more experienced ones, along with extra support from the company. So this will likely result in even more supply, especially if the economy continues to slow down, and people look for a side hustle. The Post says that Chesky responded to a question about booking slowdown complaints by saying the overall situation remains positive. He says the stories about a booking slowdown are anecdotal, and could be due to a variety of factors including changes in the way people travel. He also says that the Airbnb algorithm that produces search results will priori

In this Real Estate News Brief for the week ending November 12th, 2022… what's next after a really good report on inflation, the NAHB's latest report on housing affordability, and the ten fastest growing U.S. cities. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and a report on inflation that shows the Fed is making progress with its rate hikes. The U.S. Bureau of Labor Statistics reported a lower-than-expected .4% increase in the October Consumer Price Index which brought the annual rate down to 7.7%. It was 8.2% in September. Stock market investors were pleased that inflation appears to be subsiding, and the Dow closed up more than 1,000 points. But that doesn't mean that the fight is over. Although Fed officials are expressing some amount of optimism, several spoke out about the danger of pausing too soon on the rate hikes. (1) Richmond Fed president Thomas Barkin told CNBC that the Fed had its foot on the gas and is now ready to "pump the brakes." He explained that likely means the Fed will call for "a slower pace of increases, a longer pace of increase and a potentially higher point." He sees the Federal Funds rate going as high as 5%, or higher, in smaller increments, before the Fed gets inflation back down to the 2% level. (2) San Francisco Fed president Mary Daly said the CPI report was "indeed good news," but that 7.7% inflation is still far too high. She said: "It's better than over 8% but it's not close enough to 2 in any way for me to be comfortable. So it's far from a victory." (3) Dallas Fed President Lorie Logan had similar comments saying the CPI report was "a welcome relief" but that more rate increases are probably needed. She said: "I believe it may soon be appropriate to slow the pace of rate increase so we can better assess how financial and economic conditions are evolving." The Fed's next meeting in December happens right after the November report on the CPI, so that data will surely impact any rate hike decisions made at that meeting. Mortgage Rates Meanwhile, mortgage rates fell sharply right after the release of the CPI. According to Mortgage News Daily, the average rate on the 30-year fixed-rate loan fell 60 basis points from 7.22% to 6.62%. The Daily's chief operating officer Matthew Graham says: "This is the best argument to date that rates are done rising, but confirmation requires next month's CPI to tell the same story." (4) Jobless Claims The number of people applying for unemployment was up 7,000 last week to a total of 225,000 initial claims. That's the highest it's been in a month but it's still a low number, although some big companies are announcing layoffs. Jefferies economist Tom Simons says that "Layoff announcements from larger companies have become more frequent. So we are likely to see this number rise in the weeks and months ahead." Continuing claims were up 6,000 to a total of 1.49 million. (5) In other news making headlines... NAHB: Housing Affordability More Americans are finding it's too expensive to buy a home of their own. The National Association of Home Builders released its third quarter report on housing affordability and it shows that affordability has fallen to its lowest point since the Great Recession. According to the NAHB, just 42.2% of new and existing homes that were sold in Q3 were affordable for families making a median income of $90,000. That percentage was 42.8% in the second quarter. (6) That data includes a drop in the national median home price from $390,000 to $380,000 and an increase in the average mortgage interest rate from 5.33% to 5.72%. Home Equity Falls Lower home prices mean that homeowners are also losing some of their equity. According to Black Knight, about $2.5 trillion in home equity has disappeared since May, with the average borrower losing $30,000. Although home equity could fall further, Black Knight's president of data and analytics, Ben Graboske, says that "homeowner positions remain broadly strong." (7) The report shows that the number of people who are underwater on their loans is only .85%. That's fewer than 500,000 borrowers out of about 53 million U.S. mortgage holders. That's double what it was in May, but it's still considered quite low. Fastest Growing Cities Some U.S. cities are doing much better than others when it comes to economic growth. The Kenan Institute of Private Enterprise issued a list of the ten fastest growing cities in the nation, and New York is not one of them. (8) It may not surprise you however, that the San Francisco/Bay Area is number one on the list with a 2022 GDP of $1.4 trillion and a GDP growth rate of 4.8%. Austin, Seattle, Raleigh/Durham, and Dallas round out the top five. Denver, Salt Lake City, Charlotte, New Orleans, and Orlando are in the fifth through tenth positions. A few markets that we like for residential investment include the D

Is inflation pulling back or blowing up into a worldwide financial disaster? The latest CPI report shows that U.S. inflation has come down substantially, but just a week before that, the Fed hiked short-term interest rates by three-quarters of a percent in its battle against high prices. The CPI report is now changing what some economists believe the Fed will or should do next. But inflation is also a worldwide problem and some doom and gloom economists are worried about the possibility of "global hyperinflation." Let's take a look at a hedge fund warning and how real estate can protect you from this kind of uncertainty. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. First, the October CPI shows a lower-than-expected .4% increase in consumer prices. That brings the annual rate down from 8.2% in September to 7.7% in October. (1) It's still too high but as economist Andrew Hunter at Capital Economics said in a CNBC report: "At least it's a move in the right direction." The report triggered a huge stock market rally right after that report, with the Dow closing up more than 1,000 points. There's also a lot of talk about how inflation is much lower than it appears, because the inflation reports use lagging data. After the CPI report, Wharton Professor Jeremy Siegel told CNBC that "inflation is basically over" and the Fed is getting it wrong because it's not using up-to-date information, including data on the housing market. (2) He says there's already a decline in both home and rent prices and believes the Fed isn't taking that into consideration. When asked when the Fed should have stopped implementing aggressive rate hikes, Siegel says like "yesterday." He says the Fed still has time to take its foot off the brake at the December meeting. Any decisions at that meeting will also be influenced by the "next" CPI report for November, which will be released just ahead of that meeting. Is the World on the Verge of Hyperinflation? Meantime, one of the world's largest hedge funds recently sent letters to clients, warning them that the world could be on the verge of hyperinflation. That's when the value of your money disappears rapidly and the cost of goods changes so quickly that stores want you to ask for the price. As reported by the Financial Times, the Florida-based Ellio Fund says we are in an "extremely challenging" situation and possibly the worst since World War II. Ellio was founded by billionaire Paul Singer and manages more than $50 billion in assets. (3) In the letter it sent to clients, the firm said that "investors should not assume they have seen everything" because they have experienced other financial crises, like the dotcom bust or the 2008 financial crisis. It says that today's situation is the culmination of an extreme set of financial scenarios at the end of a long period of cheap money, and that hyperinflation is a very real possibility that could cause a "global societal collapse and civil or international strife." There's no guarantee this will happen, but the hedge fund says that we are currently headed in that direction. Elliot suggests that the stock markets will fall further, possibly as much as 50% from their peak. According to the Financial Times, the hedge fund is currently up 6.4% this year, and has only lost money in two calendar years since its launch in 1977. Fund managers named a few of the bigger financial risks it sees in the road ahead. They include potential bank losses on bridge financing, potential markdowns on collateralized loan obligations, and losses from leveraged private equity. Global Rates of Inflation So how does U.S. inflation compare to other countries? The Consumer Price Index topped 9% in June, which is the highest it's been in 40 years, but it has fallen slightly since then, to 8.5% in July and 8.2% in September. For comparison, let's take a look at a list of countries and their rates of inflation on the Trading Economics website. (4) The September/October reading on inflation ranges from -2.5% in South Sudan to 269% in Zimbabwe. Only three countries have a negative reading, and most countries are in the single to lower double digits, but we already know that it doesn't take much of an increase to cause a lot of financial pain. In the U.S., inflation has subsided a bit from 9.1% in June to 8.2% in September. Our neighbor to the north, in Canada, the inflation rate is 6.9%. To the south, in Mexico, the inflation rate is 8.7%. The United Kingdom is battling an inflation rate of 10.1%, and in Italy, it's 11.9%. France and Spain are lower at 6.2% and 7.3% respectively. Russian inflation is quite high at 13.7%. But there are many countries experiencing an inflation rate of 20% or higher, and even some with triple digit inflation. In August inflation hit 117% in Sudan and 139% in Syria. Last month, in October, Venezuela had an inflation rate of 156%. Lebanon is up to around 162% and the

For the first time ever, it now costs more per square foot for a home in the suburbs than it does for a home in the city. Redfin has been tracking this data since 2018, and says that the pandemic-inspired migration to the suburbs is still going strong, and that a typical suburban home now costs a dollar more per square foot than its urban counterpart. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. As you know, homes in the suburbs were in high demand during the pandemic because people wanted space to work remotely and a place for their kids to play outside. While demand grew for the suburbs, it weakened for the cities, along with home prices. Although home prices in the city rebounded during the pandemic's aftermath, demand continues for suburban homes, especially among millennials who can work from home and want to raise families in areas with good school systems. One Dollar More Per Square Foot The Redfin analysis on the cost of a square foot covers the four weeks ending September 25th in 91 markets. It shows that the cost of a square foot in a typical suburban home was $206 compared to $205 in the city. In more rural areas, it was $180 a square foot. (1) Those square foot prices reflect year-over-year increases of 9.5% in the suburbs, 3.5% in the city, and 8.4% increase in more rural areas. Overall home prices reflect a similar relationship, with the typical suburban home price up 6.6% to $385,000 and the typical urban home up 2.7% to $310,000. In rural areas, home prices were up about 4% to $333,000. Prioritizing Space Over Walkability Demand for suburban homes skyrockets because of the remote work movement, but many people rediscovered the urban lifestyle during the pandemic recovery. Redfin economist Sheharyar Bokhari says many homebuyers were looking for the best of both worlds – a home with both space and walkability combined with low mortgage rates. But now with higher mortgage rates, she says: "Today's buyers can't afford everything on their wish list, so many are prioritizing space over walkability." She expects urban prices to fall farther and faster because of that priority, but suggests that house hunters keep their eye on urban prices, because they might find a deal, if they are willing to sacrifice the space they get in the suburbs. But the housing market isn't easy to predict right now. Homebuyers need to examine individual markets to find what works best for them. And the Redfin data shows that suburban sales are down more than they are in the cities. Housing Market Slowdown Year-over-year, sales have declined about 25% in the suburbs, 23% in the cities, and 19% in rural areas. Average sale to list price is just under 100% for suburban neighborhoods, and a little lower than that for cities and rural homes. The share of homes with price reductions ranges from 6.4% in cities to 7.5% in suburban areas. The biggest price drops in the nation are happening in the San Francisco Bay Area. The price per square foot is down about 6.2% in San Francisco. New Orleans is second on that list, followed by Philadelphia, New York, and Oakland, California. It's very interesting to note that several Florida cities are among those where prices are still rising by double digit percentages including Tampa and Orlando. It's also interesting to note that of all the 91 markets that Redfin analyzed, only about 10% of them show declines in the price of a square foot. You can see the complete list by following a link in the show notes for this episode at newsforinvestors.com. We also invite you to become a member of RealWealth if you'd like to learn about markets that still make sense for investors. Just click on the Join for Free button at our website. And please remember to subscribe to our podcast and leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Subscribe Link: https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 1 -https://fortune.com/2022/10/31/housing-market-redfin-ceo-explains-why-home-prices-are-falling-faster-in-2022/

In this Real Estate News Brief for the week ending November 5th, 2022... the Fed's latest rate hike, why the housing inventory is surging, and what one big bank is doing to help landlords collect rent. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and another jumbo rate hike by the Fed. For the fourth time in a row, the central bank raised the Federal Funds rate by three-quarters of a point. That brings the short-term rate to a range of 3.75 to 4%, which is the highest it's been in 15 years. And the Fed says that rate hikes aren't over. They will continue until inflation comes back down to about 2%. Fed Chief Jerome Powell suggested that smaller hikes of a half or quarter point "are coming" and that at some point "it will be appropriate to slow the pace of increases" but they are now expected to top out around 5% before the Fed accomplishes its goal. (1) (2) Economists are keeping an eye on the job market as the economy slows, but initial jobless claims were down slightly this last week, to 217,000. Some economists had expected a higher number, but the job market remains strong. The number of continuing claims also remains near a 50-year low, but they were up 47,000 to 1.49 million. Job creation numbers were a little slower, but not slow enough to help control inflation. Meanwhile, the unemployment rate rose from 3.5% to 3.7% which shows that the labor market has gotten a wee bit smaller. Powell says it's still out of balance with too many job openings and not enough people to fill them. (3) Construction spending rebounded in September. The Commerce Department says it rose .2% after a .6% decline in August. Those figures include a .3% gain for multi-family construction and a 2.6% decline for single-family projects. Homebuilders are pulling back on single-family homes as higher mortgage rates scare buyers away. The year-over-year rate for construction spending is 10.9%. (4) Mortgage Rates After topping the 7% level, Freddie Mac says the average 30-year fixed-rate mortgage was down 13 basis points, to 6.95%. The 15-year was down 7 points to 6.29%. (5) In other news making headlines... Housing Inventory Hits Two-Year High The nation's inventory of for-sale homes is now the highest it's been in more than two years. Realtor.com says that new listings are down more than 15%, but that active listings are up 33.5% because homes are sitting on the market longer. Realtor.com's chief economist Danielle Hale says homes spent a median of 51 days on the market in October which is six days more than October of last year. (6) Unfortunately for buyers, it's not making it any easier to afford the high price of purchasing a home. The median price of a home is up 13.3% year-over-year along with higher loan costs. Hale says: "Home shoppers are looking at a monthly mortgage payment that is roughly $1,000 higher than at this time last year." Global Construction to Rise 60% in 15 Years While the U.S. housing market has slowed down substantially, there's a new report estimating a 60% increase in global construction over the next 15 years. The Global Construction and Infrastructure Group says that climate change will drive a lot of that construction, creating new industries and job opportunities. (7) Construction economist Graham Robinson told Strategic Risk: "With the built environment accounting for almost 40% of all greenhouse gas emissions globally, the transition to clean energy and new resilient infrastructure will boost growth for construction." Various reports show that the climate crisis has put an enormous number of homes at risk. Climate Central says an estimated $34 billion of coastal real estate could be flooded on a regular basis sometime in the next three decades. A Redfin analysis claims that more than half of all homes in the last decade are at risk of wildfires, and almost half of all homes are at risk of drought. Ditching the Rent Checks JP Morgan Chase wants to be your property manager. The banking giant launched a new property management platform for multi-family landlords. The software will send out invoices and accept rent payments from tenants. (8) Although some landlords are using digital payment systems right now, the bank says that more than three-quarters of all rent checks are still being paid by check. Many tenants reportedly say the only reason they still have a checkbook is to pay their rent. The software also provides tools for tenant screening and determining how much rent you should charge. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! You can also join RealWealth for free at newsforinvestors.com. We provide hundreds of webinars, podcasts, and articles to help get you started on your real estate journey. Members also have access to our market data, our experienced investment coun

In this Real Estate News Brief for the week ending October 29th, 2022... a turnaround for the U.S. GDP, a new high point for mortgage rates, and faltering rent growth. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and an encouraging report on the U.S. GDP. The government reported a 2.6% growth rate in the third quarter. It was better than the Dow Jones forecast of 2.3%, but is also thought to be a rebound from two quarters of negative growth. According to CNBC, the upside came from a decline in the trade deficit, along with stable consumer spending, higher government spending, and a rise in nonresidential fixed investment. (1) A positive GDP isn't eliminating concerns about a recession, especially if the Fed continues to aggressively raise interest rates to fight inflation. The PCE, which is the Fed's preferred inflation gauge shows a .5% increase in September, to an annual rate of 5.1%. That's for the core rate, which eliminates food and gas. The core rate for the well-publicized CPI, shows an annual rate of 6.6%. (2)(3) Initial jobless claims rose slightly last week. The Labor Department says they were up 3,000 to 217,000. The number of people already collecting benefits was up 55,000 to 1.44 million. (4) Economists are expecting a gradual increase in jobless numbers as the Fed continues to hike the Federal Funds rate. The housing market is feeling the impact of the slowdown. The Case-Shiller index shows that home prices were down for a second straight month. The 20-city index dropped 1.3% in August, while the national index was down 1.1%. The biggest price drops are happening along the West Coast, but the index shows they've gone down for every one of the 20 cities in the index. Year-over-year gains are still in the double digits however, at 13.1%, with Miami, Tampa and Charlotte topping the list for annual gains. (5) Sales are also down for both new and existing homes. The Commerce Department reports that new home sales were down 10.9% in September to a seasonally-adjusted annual rate of 603,000 homes. The drop follows a surprise surge in home sales the month before. Year-over-year, home sales are down 17.6%. (6) For existing homes, the National Association of Realtors says they were down 10.2% in September. MarketWatch says that buyers have become hesitant because of high home prices and interest rates. Sellers are also less likely to list, because they want to hold on to their low-interest loans. (7) Mortgage Rates Although some lenders hit the 7% mark weeks ago, Freddie Mac says the average rate for a 30-year fixed-rate loan is now 7.08%. For the 15-year, it's 6.36%. (8) In other news making headlines... Big Drop in Mortgage Deman Lenders are taking a big hit because of high rates. The Mortgage Bankers Association says that home loan demand is close to half of what it was a year ago, and has fallen to its lowest level since 1997. Demand was down 2% last week, and was 42% lower than the same week last year. (9) There was a slight increase in demand for FHA loans thanks to lower rates and lower down payment requirements. Many borrowers are also choosing a riskier adjustable-rate loans because payments are lower at first. There are about four times the number of those loans right now compared to the start of the year. The National Association of Homebuilders also reports a jump in the number of people paying all cash for new homes. That number has been increasing for the last three quarters, and hit a 20-year high of 9.5%, or 14,000 sales, for the current quarter. (10) Rent Growth at a Standstill in Some Markets Rent growth has stalled for a second straight month, and has even declined slightly in some areas. The Real Deal reports that any drops are minimal, but after the rip-roaring growth we saw during the pandemic, the pullback might feel severe for people. (11) Data from Zumper shows that apartment prices were flat, or fell slightly, in nine of the 10 most expensive U.S. cities. Zumper's CEO, Anthemos Georgiades, described the decline as a "correction to prices that had become overinflated." He says renter migration is slowing down as renters try to cut costs by living with friends or family. He says that could push rents lower if landlords are competing with each other for renters. RentCafe says we'll see 420,000 new apartments coming on line this year. That's a 50-year high for multi-family construction. But the Zumper report also warns tenants that they should not expect any drastic price drops until supply and demand are more closely matched. Rental Demand Slows Data from RealPage also shows that high rents have pushed apartment demand to a 13-year low. It dipped over the summer in the big cities like New York, Los Angeles, Houston, Dallas, and Chicago when it usually goes higher. Vacancies are also higher according to CoStar. That data shows an apart

While the Federal Reserve is trying to slow down the economy and basically kill a few million jobs, some areas are just not cooperating. Dallas, Fort Worth, Houston, and San Antonio have been gold mines for investors in recent years, and now that gold mine is moving north into the suburbs of North Texas. It's not only attracting remote workers who want a lower cost of living, but the area is turning into the next big American technology hub that will create thousands of new jobs. That's why I started a single family rental fund that is buying properties near those jobs. If you want to find out more about our Texas Single Family Rental Fund, got to GrowDevelopments.com. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. As real estate investors, you know that population growth and job growth are essential for a good real estate market. Texas has both of those. Texas Population Growth Census Bureau data shows the Dallas-Fort Worth as the top population growth region in the U.S. Three other Texas metros were also on the top ten list. From July of 2020 to July of 2021, 97,000 new residents moved into Dallas-Fort Worth. Another 69,000 moved into Houston, 53,000 into Austin, and 35,000 into San Antonio. (1) Texas Job Growth The Lone Star state also grabbed the top spot for U.S. job growth. According to the Texas Economic Development Corp., Texas created a total of 736,700 new positions since July of last year. More than 400,000 of them were created since January of this year. TWC Chairman Bryan Daniel says it's a record amount of new jobs for Texas within that short time frame. (2) Growth in North Texas But while some of the big metro growth is softening, there's another Texas hot spot that is just taking off. It's happening north of Dallas, along a 30-mile stretch of Highway 75 between the cities of McKinney and Sherman, and surrounding areas. The highway runs north from Dallas and is known as the new Silicon Alley or even Silicon Prairie by some people because it's attracting big players in the chip-making industry. The New Silicon Alley Sherman appears to be ground zero for much of this big tech growth. Just a few months ago, in May, Texas Instruments broke ground on a $30-billion semiconductor manufacturing campus in the city of Sherman. The TI project will be a huge 4.7-million square-foot campus consisting of four chip-manufacturing factories and an estimated 3,000 new good-paying jobs. According to an article in Axios, TI hopes to be producing tens of thousands of 300mm wafer chips a day by 2025. Governor Greg Abbott also announced several months ago that GlobiTech will expand its chip-making operations in Sherman with an additional state-of-the-art $5 billion dollar chip-making plant. The factory is expected to employ another 1,500 people and produce 2.4 million wafers a month when it's up and running. GlobiTech is the subsidiary of Taiwan-based GlobalWafers. A chip supplier for Apple's iPhone is also operating a factory in Sherman. It opened in 2018 as Finisar but has since changed its name to Coherent. The Mayor of Sherman says: "Sherman has spent years building a business-friendly climate and laying the groundwork to support large employers. Now for the second time in less than a year, that investment has paid huge dividends." (3) President of the Sherman Economic Development Corp. Kent Sharp says the two new chip-making projects are "once-in-a-lifetime" opportunities for the region. He says: "You work your entire career in economic development with the hopes of being part of a deal that has a "B" in front of it – and we've landed two in the past year." I think he's referring to the multi-billion dollar price tags. New Boomtown Darlings But Sherman isn't the only boomtown darling along the Highway 75 corridor. Some of the other cities getting the attention of new residents, developers, and investors include Denison, Gainesville, Plano, McKinney, and a sleepy town called Anna. The Real Deal writes about Anna, saying that developers weren't interested in Anna prior to the pandemic because it was considered too far north of Dallas. But things started changing when Covid hit the nation. Thanks to remote work, people began migrating into the Texas suburbs from the bigger metros and other parts of the country. For reference, Anna is about 45 miles north of Dallas. Anna's Mayor Nate Pike works in Sherman as a financial advisor, and is seeing first-hand how the area is changing. She says: "The amount of momentum that (local leaders are) going to put into the U.S. 75 corridor, all the way to the Oklahoma border, Anna is certainly going to feel a lot of positive impact from that." (4) The Real Deal says the city is expecting its population to more than double by 2030. That's prompting the city to invest in things like road improvements and to simplify the permitting process for developers. New rules have reportedly shortened the permi

In this Real Estate News Brief for the week ending October 22nd, 2022... what's ahead with the Fed's next meeting, the decline of the urban office, and the hybrid workplace challenge. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and forward-looking news about the Fed's next meeting. Federal Reserve officials are set to hold their meeting on November first and second, and will likely approve a .75 rate hike. They will also be discussing the size of a potential rate hike in December that many economists foresee as a smaller increase. Fed Governor Christopher Waller said in a recent speech: "We will have a very thoughtful discussion about the pace of tightening at our next meeting." (1) The jobless rate went down by 12,000 applications last week as the effects of Hurricane Ian disappeared. Initial claims dropped to a three-week low of 214,000 which indicates that layoffs are still very low. Despite all the turbulence going on economically, the low numbers mean that the job market is still very strong. (2) U.S. housing starts did a big reversal in September. They were up 13.7% in August, and dropped to a seasonally adjusted 8.1% last month. On an annual basis, they were down 7.7% in September. When you separate single-family homes from apartments, new single-family starts were down 4.7% and a big 13.1% for multi-families. Residential building permits were up 1.4% to 1.56 million which beat some analysts expectations. The numbers reflect weakening demand in the midst of high prices and shortages. (3) Home builder sentiment is also suffering. The National Association of Home Builders' monthly confidence report shows the index dropped eight points in October, to just 38. Anything under 50 is considered negative. It's the tenth month in a row that the index has fallen and it's now the lowest it's been since August of 2012. Just one year ago, the index was at 80. (4) Existing home sales continue to drop further, as the housing slowdown continues. According to the National Association of Realtors, they were down a seasonally adjusted 1.5% in September, to an annual rate of 4.71 million homes. It's the eighth month in a row that existing home sales have declined. If you exclude pandemic interference with the market, sales haven't been this low since September of 2012. Looking back one year, sales are off 23.8%. (5) Buyers are being cautious as the market changes. The median price for an existing home was down in September from $389,500 to $384,800. Inventory is also dropping. It was down 2.3% to 1.25 million homes last month because many people are staying put, and not selling. Homes are typically staying on the market for 19 days, which is up from 16 days a month ago. Before the pandemic, homes were averaging one month on the market. Mortgage Rates Mortgage rates have topped 7% for some lenders, but Freddie Mac says the average rate for a 30-year fixed-rate mortgage is 6.94%. That's up 2 basis points from the week before. The 15-year was up 15 basis points to 6.23%. (6) In other news making headlines... Urban vs. Suburban Office Space Vacancies are rising for urban office space as leases expire, and companies change their workplace strategies. A report by Marcus & Millichap shows that urban office vacancies rose 550 basis points from the beginning of the pandemic until June of last year. They've risen more slowly since then, but they are still up 30 basis points since June to 18.6%. Meanwhile, suburban office vacancies have gone "down" 30 basis points, and rents are up 2.9%. (7) The report in GlobeSt.com says that "suburban properties continue to be more resilient than their urban counterparts." They are also much cheaper to rent at about two-thirds the price. This reversal is working well for some companies with employees who now prefer the suburbs, although decisions on return-to-work policies are still very much in transition. The Workplace Transition A recent survey by the Building Owners and Managers International says that 86% of the respondees feel that the office environment is still vital for a successful business, but 71% say they will continue on a plan to facilitate some amount of remote work even if Covid disappears entirely. Only 15% of both employers and employees support full-time remote work. (8) One of the big questions is "how hybrid" should an office space be? Although each company will be unique in what works best, finding that sweet spot is difficult. Sociologist and author Tracy Brower says that some younger employees may want to spend more days at the office, but many employees want more emphasis on remote work. Brower says: "People need plenty of choices about where, when and how they work" and that "a continuing conversation" is needed to answer questions concerning engagement, performance, and other workforce behavior. At this point, there's no

In this Real Estate News Brief for the week ending October 14, 2022... another round of inflation overload, a double whammy for home loans, and the big news from Social Security. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. Federal Reserve officials released the minutes of their last meeting which show they are more worried about inflation than they are about going overboard with rate hikes. They feel that inflation is "unacceptably high" and is not falling as fast as they anticipated. They raised the short-term rate three-quarters of a point at the last meeting to a range of 3 to 3.25%. It was the third super-sized rate hike in a row, and many economists are expecting another three-quarter point rate hike at the next meeting. (1) There were two inflation reports last week that will fan the flames for additional rate hikes. First, it was the producer price index which was up .4% in September. That was double what Wall Street economists had forecasted. The index had been down in July and August because gas prices were lower, but the latest number shows that overall inflation is still raging. The annual rate is down slightly from 8.7% to 8.5%. If you remove gas and food from the equation, the annual rate is 5.6%. (2) The monthly consumer price index was also released with a similar .4% gain in September. Economists had predicted a .3% gain. The yearly rate did slip down a bit – from 8.3% to 8.2%. It had peaked in June with an annual rate of 9.1%. The core rate shows a .6% monthly gain and a yearly "core" rate of 6.6%. As reported by MarketWatch, lower gas prices kept inflation in check toward the end of the summer, but economists don't expect them to go any lower, especially since the OPEC oil cartel is cutting production. Prices were higher for things like rent, medical care, education, furniture, new cars, and auto insurance. They were down for used cars, clothes and communication. (3) Jobless claims are still low, but they did rise for a third week in a row to their highest level since August. The Labor Department reported that initial claims were 9,000 applications higher to a total of about 228,000. Many of those claims were in Florida, however, where people are dealing with the aftermath of Hurricane Ian. Continuing claims were also up slightly to 1.368 million. (4) Consumers appear to be feeling a little more confident about the economy despite the latest inflation reports. The University of Michigan's consumer sentiment survey shows it was up about a point, to a reading of 59.8. but that's only 9.8 points higher than an all-time low of 50 in June. (5) Mortgage Rates Mortgage rates continue to move higher. It is breaking through the 7% level for some loan programs, but Freddie Mac says the average 30-year fixed-rate mortgage was 6.92%. The 15-year also moved higher to an average of 6.09%. (6) In other news making headlines... Double Whammy for Borrowers Not only do borrowers have to contend with higher mortgage rates, they are now having a tougher time qualifying for a loan. According to the Mortgage Bankers Association, lenders are tightening their standards which resulted in a 5.4% decline in the Mortgage Credit Availability Index for the month of September. (7) While lenders would like the business, they are more concerned about a weakening economy and the possibility of delinquencies. The MBA's Joel Kan says: "Credit availability fell to the lowest level since March 2013 – the seventh consecutive month of tightening." He says: "There's a smaller appetite for lower credit scores and high loan-to-value loan programs." Home Flippers Are Getting Flipped Rising mortgage rates are flipping profits to the downside for many home flippers. As reported by The Real Deal, flippers were wildly successful not that long ago. At the beginning of the year, home-flipping made up 10% of all transactions. That's according to Attom Data Solutions. It fell to 8.2% during the second quarter. (8) Data from August shows that profit margins have slipped to 26% from about 31% a year ago. But they also now plummeting a lot more in some areas, like San Jose California. The report says flipping profits hit 45% in March and are now down to 6.5%. It also says that 42% of the homes sold on Opendoor are being sold for less than the iBuyer paid for them. Hard-money lender Noah Brocious told The Real Deal that flippers need to lower their expectations. He says: "Price it to sell. Today is not the time to get greedy." Social Security Will Be Giving Retirees a HUGE Raise Retirees will be getting a big raise in their Social Security checks next year. Officials announced that the Cost of Living Adjustment or COLA for 2023 will be a whopping 8.7%. That's even higher than the giant 5.9% that recipients got last year. (9) The increase will apply to about 70 million people who are on Social Secur

San Francisco voters will be faced with a ballot measure next month on whether to impose a "vacancy tax" on multi-family units that sit empty for too long. Proposition M is targeting real estate investors who park their money in properties that remain unoccupied. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Proponents of Prop M claim that the city's housing shortage is at least partially due to investor-owned properties that sit vacant for long periods of time. And that by imposing a progressive tax on the vacant units, investors will be motivated to rent them out or sell them to someone who wants to live in them. Proposition M Exemptions Owners of vacant single-family homes and duplexes would be exempt. Although some proponents feel the rule should be applied across the board, it would only apply to units that have sat empty for 182 days or more in buildings with three or more units. There would be other exemptions for non-profit organizations, government agencies, vacancies due to natural disasters, an owner's death, or for one year after the construction of a new building. (1) The measure is based on a review by the city's Budget and Legislative Analyst's Office several months ago. It states that the city had more than 40,000 vacant housing units in 2019. That's just under 10% of the 406,000 units that exist in the city. An article in the San Francisco Public Press says that Census Data indicates that 15% of San Francisco's apartments, condos and homes are currently unoccupied. (2) The issue has become a hot-button topic among housing advocates. According to Executive Director of the Housing Rights Committee, Fred Sherburn-Zimmers: "A home is a home, and we are going to tax the shit out of it until you rent it out to San Franciscans." San Francisco's Vacancy Rate It's not clear how many units this proposition will impact because the tax will only be imposed if the unit sits vacant for at least six months. And, an economic impact report by San Francisco's Chief Economist, Ted Egan, shows that the city's residential vacancy rate is not any higher than other Bay Area city for units that are vacant that long. That would indicate that San Francisco does not have a unique problem within the Bay Area cities. It also means that the bulk of the units would likely not trigger a "vacancy tax." So it seems that long-term vacancies are not unusually high in San Francisco, and the measure would not have an impact on changing the number of shorter-term vacancies. What it would impact are units that are kept off the market for more than six months allegedly by investors who plan to flip them once they increase in value. Tax Based on Unit Size & Length of Vacancy Taxes would range from $2,500 to $5,000 a year, if it passes. The amount of the tax would correspond to the size of the unit and could go as high as $20,000 if the unit continues to sit empty. According to Bisnow, a similar tax was adopted in Vancouver, Canada which returned 18,000 units to the housing inventory in 2019, and generated $21 million. The Real Deal reports that Oakland, California, also approved a vacancy tax in 2018 which raised around $7 million in 2020. And San Francisco already has a similar tax for some commercial buildings. The SF Budget and Analyst's study suggests that a vacancy tax would restore about 4,500 residential units to the inventory and raise about $38 million. The money would go toward affordable housing and rent subsidies, but supporters say the primary goal is to get investors to return the units to the market. Opposed to the measure is the San Francisco Apartment Association which says the city should be building more homes instead of pressuring investors. The Housing Action Coalition is also in favor of prioritizing the construction of new homes. If voters approve the measure, it would go into effect in 2024. Please visit our website for more real estate news and housing market data at newsforinvestors.com. And please remember to subscribe to our podcast and leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.bisnow.com/san-francisco/news/multifamily/residential-vacancy-tax-prop-m-115798 2 -https://www.sfpublicpress.org/would-tax-on-vacant-homes-push-owners-to-lease-empty-sf-units/

In this Real Estate News Brief for the week ending October 8th, 2022... what the job market says about rate hikes, where renters need to "catch up" on their rent, and why dating has become somewhat of a financial burden for millennials. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and signs that the labor market is cooling off. On Tuesday, the Labor Department reported that the number of job openings fell substantially, from 11.2 million in July to 10.1 million in August. That represents the fourth time job openings have declined in the last five months and the second largest monthly drop ever. (1) The weekly unemployment report on Wednesday also shows that more people lined up for benefits. Initial claims jumped to a five-week high of 219,000, although they remain at historic lows. But the additional 29,000 applications are an indication of a slight rise in lay-offs. The number of ongoing unemployment claims was also higher. They rose 15,000 last week to 1.36 million. (2) Economists aren't reading too much into the unemployment report quite yet however. They say the higher numbers could be due to the way the government does seasonal adjustments, although they do expect layoffs to rise gradually as the Fed raises rates. Economists are also in the wait-and-see mode regarding job openings. Economist Stephen Stanley of Amherst Pierpont Securities told MarketWatch that he wants to see another significant monthly decline in job openings before he's convinced that the job market is loosening. And then on Friday, the government reported that companies hired an additional 263,000 employees. That's a 17-month low and brings the unemployment rate down to 3.5%, but it's the slowest rate of job growth since April 2021 so it still shows a hiring slowdown. The labor shortage has contributed to inflation as workers negotiate for higher pay, but those pay increases are also slowing down. Over the past year, they've declined from 5.2% to 5%. Economists expect the Fed to continue to raise rates until the number of job openings more closely matches the number of workers available to fill them. The Fed is predicting that unemployment will grow to 4.4% by the end of next year. An article in Construction Dive points out that the hot September jobs report is also "terrible" for construction. It says that unemployment for the industry as a whole dropped to 3.4% in September, which is below the national rate of 3.5%. And that means that workers have even more negotiating power for higher wages especially among hard-to-find skilled professionals. (5) Builders are pulling back on their output, however. The Commerce Department reports that construction spending was down .7% in August. Spending for single-family construction accounted for the steepest drop. It was down 2.9%. Spending on multi-family construction was up .4%. (6) Mortgage Rates Let's see where we are on mortgage rates. Freddie Mac says the average 30-year fixed-rate mortgage was down slightly. It fell 4 basis points to 6.66%. The 15-year was down 6 points to 5.9%. (7) Realtor.com reports that home buyers have lost about $107,000 in buying power because of higher interest rates. (8) In other news making headlines… Renters Who Are Behind on their Rent A new survey shows where renters are struggling the most to pay their rent. According to a report by MyEListing.com, 15% of renter households are behind on their rent right now. In some states, that number is closer to 25%. (9) It shows that South Dakota, Alabama, and New Jersey have the highest number of tenants who are not caught up on their rent. In South Dakota, it's 26% while Alabama and New Jersey are 25% and 24% respectively. As for the five cities with the highest number of renters who are not paid up, Miami tops the list at 25%. Houston, Philadelphia, New York and Chicago round out the top five. Millennials Are Going into Debt for Love The dating game is getting very expensive for millennials, and for other age groups as well. According to a Lendingtree survey, 22% of millennials and 19% of Gen Z'ers have gone into debt to pay for their dates. (10) Almost one in five said they're going on fewer dates because it's so expensive and 14% say they are spending less on dates. On average, men spend $104 on a first date while women spend $81. As for who should pay, in a heterosexual relationship, 54% of men say they should while 36% of women feel that way. Women are more likely to say that costs should be split, and some say whoever asks the other person for a date should pay. That's it for today. Check the show notes for links at newsforinvestors.com. While you are there, you can join RealWealth for free. You'll find a wide range of information on real estate investing and the creation of long-term wealth. And please remember to hit the subscribe button, and leave a review. Than

California has another tool in its toolbox to help close the housing gap. It's legislation that will make it easier to convert dilapidated strip malls, half-empty office buildings, and weed-filled parking lots into multi-family housing. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Governor Gavin Newsom signed Senate Bill 6 and Assembly Bill 2011 on September 28th. The legislation will allow the adaptive reuse of properties that are zoned for retail, offices, and parking in suburban and rural city centers. The new rules are expected to help California reach a goal of 2.5 million new housing units by the end of the decade. One million of those homes need to be affordable, according to the Statewide Housing Plan. It will also help eliminate resistance from local governments, unions, environmentalists, and developers. Supporters are calling it a win-win for housing and for run-down commercial areas that make some cities look like ghost towns. (1) Two Policies, One Goal Lawmakers approved both bills to satisfy two sides of a dispute involving unions, developers, and other groups. The powerful State Building and Construction Trades Council of California supported SB 6 along with builders and business groups. The California Conference of Carpenters and the Service Employees International Union of California supported AB 2011. (2) After weeks of tense negotiations and no deal, lawmakers decided to approve both bills. They each give developers different options, but they both work toward the same goals. They both make it easier and faster to build homes in vacant or underused commercial space. They both have requirements for the amount of affordable housing produced. And they both guarantee that workers will be paid union wages. They are also both designed to keep new development near city centers and transit corridors which will help support the state's carbon reduction goals. Developers will have the option to follow whichever policy works best for a specific project. Senate President Pro Tem Toni Atkins called it a "game changer when it comes to producing desperately needed housing for all income levels." SB 6 author, Senator Anna Caballero, also sees this as a way to expedite the process of building as many as 2 million housing units. Assembly member Buffy Wicks, who wrote AB 2011, says the legislation provides land to build homes, incentives to attract workers to the construction industry, and reduces the red tape to get projects going in areas that make sense for transit-oriented affordable housing. YIMBY CEO, Brian Hanlon says this legislation "could unlock the potential for millions of affordable homes in California." He says: "California has a huge amount of under-utilized and abandoned commercial properties that could see rapid development of subsidized affordable housing… and would include good jobs with fair wages for construction workers." (3) Closing the Housing Gap in California This is just the latest in a long list of bills to create more housing in California. Among the more significant ones is Senate Bill 9, or what's known as the California Home Act. It was approved last year, and allows single-family homeowners in most parts of California to divide their properties into two lots, and build as many as two homes on each lot. It also streamlines the permitting process. (4) That bill follows several other bills in recent years that allow more housing density, including ADU's on properties with single family homes. As reported by The Atlantic, there's been an ADU boom since new laws made them legal and desirable. They've reportedly increased 1,421% from 2016 to 2021. About one out of every seven California homes is now, reportedly, an ADU. The newest adaptive-reuse legislation is another step for California in the affordable housing direction. Governor Newsom says it will help address what he calls the golden state's "original sin" of housing affordability. Both bills go into effect on July 1st of next year. The JDSupra website has a concise list of features for both bills. If you want to take a look, you'll find a link in the show notes for this episode (at newsforinvestors.com). Please visit our website for more real estate news. You can also find out more about housing markets across the U.S. and how you can invest in those markets. Just hit the "Join for Free" button at the top of the page, for access to our Learning Center and our Investor Portal. And please remember to subscribe to our podcast and leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.forbes.com/sites/jamiegold/2022/09/30/california-passes-adaptive-reuse-legislation-to-address-housing-crisis/?sh=61f273824648 2 -https://www.latimes.com/california/story/2022-09-28/california-affordable-housing-commercial-properties 3 -https://cayimby.org/california-yimby-statement-on-governor-signing-major-housing-legislation

In this Real Estate News Brief for the week ending October 1st, 2022... what's up with the GDP, inflation and jobs, why rent growth is slowing, and a new law for California job seekers. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We have plenty of economic news to report, but first, a few words about Hurricane Ian which has ripped across Florida and South Carolina. Our hearts go out to the families and communities who have been affected. Ian was one of the strongest hurricanes to hit the U.S. and serves as a reminder for homeowners with a high-risk of flooding to check their insurance coverage. (1) Flood insurance is getting more expensive, but it's better than coming up short after a big hurricane. According to ValuePenguin, the average cost of flood insurance from the National Flood Insurance Program is $985 a year. (2) The government's latest revision on the GDP shows the economy shrank .6% during the first half of the year. That's the same as the previous estimate, but as CNBC reports, there's still a lot of disagreement on whether the nation experienced or is experiencing a recession. It's widely believed that two quarters of negative growth defines a recession, but there are other factors to consider in today's environment that don't support that. The strong job market is one of them. With unemployment around 3.7%, some economists believe the economy is expanding. And many are predicting growth in the third quarter. There's also concern that the economy could falter next year, as the Fed continues raising rates to control inflation. (3) And that's a big problem. The so-called personal consumption index for August shows a .3% rise in prices. Without food and gas, the core rate was .6% higher. That shows that inflation is still running hot and brings the annual rate of inflation for the PCE from 4.7% to 4.9%. That's still lower than a 40-year high of 5.3% in February. (4) The Federal Reserve believes the PCE reading on inflation is more accurate than the CPI. Last week's jobless report shows that initial claims dropped to their lowest level in five months. Benefit applications were down to 193,000. The number of people already collecting unemployment benefits also dropped. The total is about 1.35 million. (5) August was a good month for new home sales. The Commerce Department reports a 28.8% surge to a seasonally-adjusted annual rate of 685,000 homes. As reported by MarketWatch, that's the second-biggest month-to-month jump in new home sales ever. It's also a big reversal from July, when new home sales were down 8.6%, and full-year sales are expected to be down as much as 20%. Some economists attribute the August surge to home buyers rushing to get into a new home before mortgage rates rise any further. (6) Existing home sales went in the other direction. The National Association of Realtors says that pending home sales were down 2% in August. Pending home sales only indicate the likelihood of a sale. NAR is expecting existing home sales for the entire year to fall 15.2%. But NAR's chief economist, Lawrence Yun, expects more home sale activity in 2023. (7) Home price growth is slowing down as mortgage rates get close to the 7% mark. The S&P CoreLogic Case-Shiller 20-city index was down .4% in July. That brings the annual rate of home price growth down from 18.7% to 16.1%. The national home price index was also down by a smaller .2%. The decline is reportedly the fastest decline in home price growth in the history of this index, and the first time that home price growth has gone down since February of 2012. (8)(9) Mortgage Rates Mortgage rates continue to rise. Freddie Mac says the average 30-year fixed-rate mortgage was 41 basis points higher last week, for an average of 6.7%. The 15-year was up 52 points, to 5.96%. Freddie also says there's a wide range of weekly rate quotes, so it's important to shop around if you're looking for a home loan. (10) In other news making headlines... Asking Rents Are Climbing Redfin reports that asking rents were up 11% year-over-year in August to a national median of $2,039 a month. That's a record high, but it also represents a slow-down in rent growth. Rent growth peaked in March with an annual gain of 19%. (11) Redfin economists expect the slow-down to continue as a result of a slower economy, and a boost in rental supply. As Redfin economist Taylor Marr points out: "There are nearly a million rental units under construction that will hit the market in the coming months and years." But that's still far fewer than the nation needs to meet housing demands. California Job Ads to Include Salary Info A new California law will make it easier for job applicants to know what they'll get paid. Governor Gavin Newsom just signed a salary transparency bill into law. It requires that job postings include pay ranges, and applies to businesses with 15 or more employees. A few other st

We've been seeing signs of a housing market pullback, but it's now official that home price growth is slamming on the brakes. The S&P CoreLogic Case-Shiller home price data is considered the gold standard for home prices, and the July numbers are now showing the first month-over-month decline since 2012. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. National Home Price Index The report, released on September 27th, shows that national home prices were down .2%, for an annual rate of 15.8%. In June, the annual rate was 18.1%. CoreLogic says the difference between those two months is the steepest decline in the history of the index. (1) Managing Director at the S&P Dow Jones Indices, Craig Lazarra, says the slide in pricing "reflects a forceful deceleration." He says: "As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day. Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate." (2) 20-City Home Price Index The 20-City Home Price Index shows a bigger slowdown in price growth. The month-over-month reading was down .4% for an annual rate of 16.1% in July. It was 18.7% in June. Annual price growth is still quite high in some metros. Tampa is at the top of that list with the largest year-over-year gains of 31.8% in July. Miami was second with 31.7%. Dallas follows with 24.7%. Home Prices Decline as Mortgage Rates Rise Home prices have been declining as mortgage rates rise. Home loans are currently around the 7% level, after a long period of very low rates. That's happening in conjunction with the Federal Reserve's effort to bring inflation back down to 2%. Although the Fed's actions are not directly connected to mortgage rates, they do influence them. Many homebuyers can't afford to pay the high cost of a mortgage along with a high-priced home, so that's taking some of the sizzle out of home sales, and home price growth. A lack of inventory is still putting pressure on home prices however, but the momentum of that upward trajectory is slowing down. Other Home Price Reports A separate report from the Federal Housing Finance Agency also shows a similar drop in home prices. It says that prices were down .6% in July compared to June, and that June only produced a .1% gain in home prices. Year-over-year, the FHFA index was up 13.9%. John Burns Real Estate Consulting also tracks home prices in 148 markets. According to that data, 98 of those markets have seen a drop in home values from a peak earlier this year. Eleven of the markets show a decline of more than 5%. (3) Zillow also reports that home values have fallen in 89 of the 150 largest U.S. markets. And in ten of those markets, values have fallen more than 5%. Metros seeing the biggest price declines are the high-cost tech hubs and frothy work-from-home destinations. Among the high-cost tech hubs with the biggest price declines are San Jose, San Francisco, and Seattle. The work-from-home metros with the biggest price declines include Austin, Boise, and Phoenix. Real estate analysts say the new data is showing them that the expected home price correction is more pronounced and more widespread than they previously expected. If you want to keep up with real estate news, please subscribe to this podcast. You can also find out more about how to succeed as a real estate investor at our website (newsforinvestors.com). Just hit the "Join for Free" button at the top of the page, for access to our Learning Center and our Investor Portal. And please remember to leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.corelogic.com/intelligence/reports/us-corelogic-sp-case-shiller-index-takes-another-step-back-in-july-up-15-8-versus-18-1-in-june/ 2 - https://www.cnn.com/2022/09/27/homes/case-shiller-july-2022 3 - https://fortune.com/2022/09/28/housing-market-home-price-correction-2022/

In this Real Estate News Brief for the week ending September 24th, 2022... the Fed's third big interest rate hike in a row, a record pile of uninvested cash, and the listing data that is changing house hunter choices. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and a big interest rate hike by the Fed. The central bank has been getting more aggressive about tackling inflation, and hiked the Federal Funds rate by another three-quarters of a point. Fed officials also plan to continue hiking the funds rate until inflation recedes to the 2% level. They began raising it in March from a near zero level, and have now brought it to a range of 3 to 3.25%. Higher rates will make adjustable-rate loans more expensive. It will also slow the economy down, and reduce hiring, although the job market is still showing a lot of strength. (1) Fed Chief Jerome Powell says it's not clear whether the money tightening process will lead to a recession or how significant it might be. But Fed officials do expect to see higher levels of unemployment. They expect the jobless rate to rise to 4.4% next year. That's .7% higher than it is now. (2) The latest weekly jobless report shows a slight rise in filings for the first time in five weeks. Initial claims were up 4,000 to 213,000, but that's still a low number. (3) Powell also talked about the need for a housing market correction. He says: "For the longer term, what we need is supply and demand to get better aligned, so house prices go up at a more reasonable pace and people can afford (to buy them)." But he doesn't expect that process to be easy or short-lived. Senior economist of the National Association of Realtors, Nadia Evangelou, says that many homeowners won't want to move because they have super low mortgage rates, and that will impact inventory which could push home prices even higher, instead of lower. (4) Meantime, builders are trying to attract more buyers with lower prices, and more new homes. The Commerce Department reports that overall housing starts were up 12.2% in August after a 10.8% decline in July. Starts were up 18.5% for apartments, and 3.5% for single-family homes. Permits were down 10%. Builder sentiment is also down, despite the increased activity. According to the National Association of Homebuilders, it fell to its lowest level in September since about 2014. It's the ninth month in a row that builder confidence has fallen. Rising mortgage rates and supply chain disruptions are builders' biggest concerns. (5) Existing home sales were down again in August. NAR says they fell .4% for the month to an annual rate of 4.8 million homes. That's the lowest number since May of 2020 when the pandemic shut everything down. Compared with last year, sales are down 19.9%. (6) Mortgage Rates Mortgage rates remained above the 6% level thist last week. Freddie Mac says the average 30-year fixed-rate mortgage rose 27 basis points to 6.29%. The 15-year was up 23 points to 5.44%. (7) Mortgage rates have basically doubled since the beginning of the year, and even though they are low by historical standards, they have raised the monthly mortgage payment for a $400,000 loan from about $1,660 last year to about $2,470 this year. (8) In other news making headlines... Record Pile of Uninvested Capital Venture capitalists are sitting on a record amount of uninvested capital. A report from Colliers shows that VC investors have about $290 billion dollars sitting on the sidelines, and that VC activity pulled back about 12% during the first half of this year. But it still remains higher than historical norms. (9) The Center for Real Estate Technology & Innovation says that during the first half of this year, 26% of venture capital investments went into real estate technology, or about $13 billion. But that leaves plenty of cash on the table for future investment. The Colliers analysis says: "There is no denying that VC investment is a key driver of commercial real estate demand. The states seeing the most VC dollars are California, New York, and Massachusetts. Homebuyers Paying Attention to New Flood-Risk Data New flood-risk data on listings could steer house hunters away from flood-prone areas. Redfin just conducted a three-month study with 17.5 million users on how flood-risk data impacts the home buying process. It found that users who looked at homes with a severe or extreme flood risk ended up bidding on homes with a moderate risk of flooding. Users who didn't have that information were not impacted.(10) Redfin chief economist Daryl Fairweather says the information will help users make more informed choices. He says: "Some will opt to move out of risky areas altogether, while others will stay put but invest in making their homes more resilient to disaster." The information could also lead to a decline in home values in flood-prone areas. Pa

With recent rate hikes and Federal Reserve Chief Jerome Powell saying there are several more to come, investors should expect a recession right around the corner. Some say we are already in one, and that could be true, except that unemployment is still very low, job creation is high, banks have high reserves and corporations are sitting on lots of cash. Retail sales are strong and consumers are still spending. Plus the Fed is planning to continue raising rates, which is not what they do during a recession. They lower rates in a recession. This tells me the economy has been racing at full speed, while the Fed is stomping on the breaks. That sounds like a volatile ride, and Powell admitted it could be a hard landing. Investors need to be wearing their seat belts, and maybe a helmet and pads. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. If you haven't recession-proofed your life yet, you better get on it. This means cutting back on unnecessary expenses, sticking to a budget and saving money so you have plenty of cushion. I was at a real estate conference in yesterday, and it seemed that a lot of people were not fully aware of how much the economy is changing and will change over the next year. Last year's strategies may not work today. In fact, strategies from the last decade may not either. Real estate investors should take an audit of their portfolios and make sure they have plenty of reserves for potential vacancies. After all, Powell is planning to wipe out a million jobs, at least. With that said, times like this can offer some of the best opportunities for investors. We are seeing it already, as there is far less competition in the market. That's why I've launched a single family rental fund in North Texas where job growth is not slowing down. The Biden Administration wants chip manufacturing to come back to the U.S., so chip manufactures are headed to North Texas to build their factories, along with many companies escaping high tax/high regulation states like California. You can find out more about the massive job creation in North Texas, and our new fund at https://www.GrowDevelopments.com. It's a Reg D 506C. When buying property in today's market, I stick with four building blocks that I've found to be resilient in any economy. Let's call them the legs of a chair. (1) Job Growth The first leg is "job growth." Today, it's not too difficult to find markets with job growth. This year, companies created an average of 450,000 new jobs every month, compared to less than half that amount during the decade before the pandemic. There are now more than 11 million job openings. As investors, it's important that we understand where those jobs are. It's also important that the metro area be well diversified with employment opportunities, and not dependent on just a handful of industries that could be affected in a downturn. According to John Burns Real Estate Investing, the top 5 markets that have had the highest growth of high paying jobs are Las Vegas, Dallas, Jacksonville, Austin, and Atlanta. Metro areas that have more high paying jobs today than before the pandemic are Austin, Dallas, Jacksonville, Raleigh-Durham, and Tampa. When you are looking for a place to buy investment property, make sure the job growth we are seeing at the national level is also happening at the local level, because… where there are jobs, there will also be population growth. Population Growth That leads us to the second leg of the chair: "population growth." Right now, there's a whole generation of young people, the largest in U.S. history, ready to settle down, start families, and buy homes, or rent if they can't afford to buy. This generation is also highly educated and good with technology, so many can work remotely. That's something to take into consideration when you are looking at migration patterns. You can check migration reports from U-Haul and Atlas Van Lines to see which metros are attracting the most newcomers. Texas and Florida have been at the top of that list. You can also see which metros are losing more people than they are attracting. Those are the metros you might want to avoid. Lately, we've seen a lot of movement from the Northeast to the Southeast, and from the West Coast to the Northwest or further inland, like Arizona, Colorado and Texas. Affordability The third leg of our chair is "affordability." Home prices have surged, along with interest rates, making it tough for first time home buyers to afford a home so they are forced to rent. Landlords can provide housing that is affordable to these want-to-be homeowners, solving one of the biggest problems today. In order to find property that a renter can afford, be sure to understand the average income of the area. Rent should be 3-4 times less than monthly incomes. You can determine home-buying affordability by comparing the average mortgage payment to the average income of the ar

The Federal Reserve followed through with its plan for another rate hike this week. Fed officials hiked short term rates by three-quarters of a percent. Fed Chief Jerome Powell also reiterated his determination to bring inflation levels back down to 2% with more rate hikes and warned that the housing market is headed for a "correction." Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Powell said after the September policy meeting: "Our expectation has been we would begin to see inflation come down, largely because of supply side healing. We haven't. We have seen some supply side healing but inflation has not really come down." (1) Fed Hikes Short-Term Rates The Federal Open Market Committee raised the Federal Funds rate to a range of 3 to 3.25%. It's the third consecutive .75% rate hike and brings the overnight lending rate to the highest it's been since early 2008. The central bank started raising rates in March from a level that was close to zero. Fed officials say they plan to continue to raise rates until they reach a "terminal rate" of 4.6%. That would be a range of 4.5% to 4.75%. They are expecting to raise the funds level another 1.25% this year with two rate hikes. That leaves one quarter point rate hike for next year. Personal Consumption Index Goal The FOMC is hoping that rate hikes will push the Personal Consumption Expenditure index or PCE down to 5.4% this year, and the core rate to 4.5%. They aren't expecting to get inflation down to a target rate of 2.1% until 2025. Powell says: "My main message has not changed since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done." He believes that a recession is possible, but that no one knows for sure if this will take place, or how significant it will be. (1) Shelter Costs A Big Part of Inflation He did warn that the fight against inflation, which has made homeownership unaffordable for many Americans, will likely lead to a housing market correction. Shelter costs have been a key component of the recent inflation run-up. That includes both the purchasing of homes and paying rent. Powell said that home prices have been rising at an unsustainably fast level, and that created a big imbalance between supply and demand. He said: "For the longer term what we need is supply and demand to get better aligned so housing prices go up at a reasonable level, at a reasonable pace, and people can afford houses again." (2) Shelter Inflation Will Be Slow to Fall But he doesn't expect that to happen quickly. He says: "I think that shelter inflation is going to remain high for some time. We're looking for it to come down, but it's not exactly clear when that will happen. It may take some time. Hope for the best, plan for the worst." Which is why the central bank is now hiking rates aggressively. As for the GDP, and a slower economy, Fed officials revised their GDP estimate for this year to just .2% and 1.8% for next year. We'll be reporting on how this will further affect the housing market, and specifically which markets will feel it the most, in upcoming episodes. To read more about this, check for links in the show notes at newsforinvestors.com. While you are there, please sign up for a free membership to RealWealth.com. You'll find hundreds of podcasts, webinars, and articles on a wide range of topics that include the housing market, the economy, and real estate investing. And please remember to subscribe to our podcast, and leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.cnbc.com/2022/09/21/fed-rate-hike-september-2022-.html 2 - https://www.cnbc.com/2022/09/21/real-time-updates-of-the-federal-reserves-big-rate-decision-and-powells-press-conference.html

In this Real Estate News Brief for the week ending September 17th, 2022... what the job market says about recession, why home prices might be peaking, and how much lot prices have contributed to high home prices. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. Moody's chief economist, Mark Zandy, says "we're not even close" to a recession right now. He spoke at the National Multifamily Housing Council's fall meeting last week. He says it's difficult to even think we're in a recession with such great data on the job market. We've got high job creation numbers, a high number of unfilled positions, a high "quits rate" which means that employees feel confident about quitting one job to find another, and a low number of layoffs. (1) He also says it's likely that GDP numbers will be revised higher, and the average homeowner has about $185,000 in equity with money in the bank. According to Zandi, the only part of the economy that is unhealthy right now is the federal government's debt. But he also says the government has a triple-A rating so he isn't worried about that. One thing he did warn about is the impact of monetary tightening on the housing market because housing costs are a big part of the Consumer Price Index. He says: "The Fed is telling us, 'We have to raise interest rates,' but this is complicating the situation significantly because now many are having a harder time affording to pay rents. This has or will cause 'demand destruction' and people will soon have to begin dipping into their bank accounts." And we did get some big numbers in the latest report on the CPI. The government says the index was up .1% in August, which isn't much, but the core rate was up a worrisome .6%. That's double the increase from July. The Fed considers the core rate a more accurate gauge of inflation because it omits volatile food and energy prices. (2) The annual core rate rose from 5.9% to 6.3% while the overall CPI came down from 8.5% in July to 8.3%. The Producer Price Index also showed al .1% increase in wholesale prices, but the core rate was only up .2%. That brought the core rate down from 5.8% to 5.6%, and the overall rate from 9.8% to 8.7%. (3) Zandi is predicting that inflation will fall to 4% by the end of next year. Consumers are feeling more confident about the economy. The University of Michigan's consumer sentiment survey shows it rose to 59.5 which is a 5-month high, mostly because of lower gas prices. Prices for just about everything else are higher. Consumers are expecting to see a sharp decline in prices over the long term, however. The survey shows they expect to see it drop to 2.8% over the next five years. (4) The big economic news will come from the central bank in the days ahead. Many economists Fed officials to hike the overnight lending rate by a hefty .75% to fight inflation. But some economists say the Fed may go higher than that, with a rate hike of 1%. The last time the Fed raised rates by that much was in 1982. (5) Mortgage Rates Mortgage rates rose above the 6% level last week. Freddie Mac says the average 30-year fixed-rate mortgage was up 13 basis points to 6.02%. The 15-year was up 5 points to 5.21%. (6) In other news making headlines... Are Home Prices About to Peak? We could be getting close to a peak in home price growth. Although prices are still rising, the annual rate of growth fell to 11.7% for the week ending September 10th with a national home price median of $435,000. (7) Prices have been growing but slowing at a rate of 15 to 16% in July and 13 to 15% in August. The September numbers represent a substantial slowdown.. Realtor.com's chief economist, Danielle Hale, says: "the rate (of home price growth) took a notable step back this week to the lowest pace since January." It's also the time of year that home price growth typically slows. In fact, Realtor.com says the best time to buy a home is the end of September. Prices are expected to be about $20,000 lower than they were in June. The latest housing trends also include a 13% drop in new listings, an extra six days on the market, and an average mortgage rate that is now above 6%. Home Lot Prices Still Heading Skyward Contributing to high prices for new homes is the cost to purchase buildable lots. The National Association of Home Builders recently issued a report for last year that shows six out of nine census areas hit new records. (8) The NAHB says the national median is now $55,000 per lot with the most expensive lots in New England. They were almost four times as much as the national median, at $200,000. That's mostly due to low-density requirements and larger lots for single-family homes. Lots along the West Coast were the second most expensive with a median of $143,000. Remember, these lots are also smaller than lots in other parts of the country. The Mid-Atlantic had a median o

Rent growth is cooling off a bit for both apartments and single-family rentals. New data from Yardi Matrix shows that national rent growth declined slightly in August. That could be a sign of the housing market slowdown, but for landlords who are worried about their ROI - the year-over-year rent growth is still close to 10% for both asset classes. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Yardi data shows that average asking rent for single-family homes was down $2 a month in August, to $2,090. The year-over-year growth percentage was 9.5% or about 170 basis points less than July. In July, rents were up an average of $7 a month for an annual growth rate of 11.2%. So you can see, single-family rent growth has pulled back a little, but it's still showing strong growth. (2)(3) For apartments, the average asking rent was down $1 a month in August, to $1,718 with a year-over-year growth rate of 10.9%. That's also 170 basis points lower than July, and is down from an annual rate of 12.6%. In Yardi's most recent report, analysts say: "Rent growth tends to slow in the fall, but this year comes at the tail end of unprecedented increases. The deceleration in August was strongest in many of the markets that have had the most growth over the past two years, a sign that affordability is becoming an issue." The report says that rent growth could continue "decelerating" for the rest of the year. Among the markets seeing the biggest declines is Orlando, Florida, where rents have skyrocketed. Year-over-year rent growth for apartments was 20.2% in July and dropped to 16.9% in August. Both numbers are well above the national average. Another example, which is also in Florida, is the rent growth for Tampa. It was 17.5% year-over-year in July, and dropped to 14.0% in August. Even some of the pricest rental markets are still seeing rent growth, despite the pullback. San Francisco's year-over-year rent growth was 9.0% in July and dropped to 8.5% in August. In Phoenix, annual rent growth was 13.3% in July, and fell to 9.6% in August. The report also says that rents declined the most for high-end rental housing. In fact, rent growth was negative for high-end rentals in 21 of Yardi's top 30 metros. Apartments.com also reports a slowdown in rent growth for apartments. It says that rents were down .1% across the biggest metros, which is the first time in 20 months that rents have gone down. It says that annual rent growth was 7.1% in August which is down from 8.4% in July. (4) The report says that rents were down the most in Sunbelt cities because rents haveen soaring in those areas throughout the pandemic. Out of 40 markets tracked by Apartments.com, 13 saw rent growth. Orange County, California is at the top of the rent growth list for August, with rents up 1%. Saint Louis, San Diego, Columbus, Cleveland, Salt Lake City, Los Angeles, and Portland were also on the positive rent growth side. You can check for more rent growth data by following links in the show notes at newsforinvestors.com. You will also find tons of information on our website about investing wisely in the real estate market, despite all the challenges we face today. Please hit the join link on our website to become a free member. And please remember to subscribe to our podcast, and leave a review! Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 -https://yieldpro.com/2022/09/annual-rent-growth-rate-falls-as-rents-decline/ 2 -https://www.yardi.com/news/press-releases/national-average-asking-rents-stopped-growing-in-august-according-to-yardi-matrix/ 3 -https://www.yardi.com/news/press-releases/multifamily-rent-increases-decelerate-according-to-yardi-matrix/ 4 -https://www.businessinsider.com/rent-prices-fell-august-first-time-in-20-months-2022-9

In this Real Estate News Brief, we'll look at economic news from the week ending September 10th, 2022... Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News Last Monday was Labor Day, and there were few reports issued during the rest of the week. But Fed Chief Jerome Powell rocked the stock market when he spoke at the Cato Institute. It was a conference on monetary policy, where Powell vowed to fight inflation with more rate hikes, and led economists to believe we'll see another .75-1 basis point hike at the central bank's meeting later this month. It would be the third such rate hike in a row, and would bring the Federal Funds rate into a range of 3.25 to 3.50%. (1) Powell said during the speech: "History cautions strongly against prematurely loosening policy. I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done." Fed officials want to get inflation back down to the 2% level. The Consumer Price Index was 8.5% in July. Powell also stated there could be some "pain" in the job market which includes the possibility of layoffs. But despite the rate hikes that have already taken place, the job market is still strong. In my opinion, it's going to take some time to burn off the massive liquidity that Powell injected into the market over the past two years. According the Federal Reserve Bank of St Louis's M2 chart, the amount of money circulating in early 2020 was $15.2 trillion. Today, it's hovering around 21.6 trillion dollars. That's over $6 trillion dollars still more still in circulation. It's like Powell couldn't take his foot off the gas until March of this year, and then suddenly hit the breaks. However, the government does not seem to be slowing down the printing presses, with it's student loan debt cancellation program that could cost up to $1 trillion and now the Inflation Reduction Act that only 1 in 4 of voters believe will actually reduce inflation, according to a recent survey from Morning Consult/Politico. 34% believe it will make inflation worse. A Forbes article state that the federal government had a $2.8 trillion deficit in fiscal year 2021, mostly comprised of Covid-19 relief spending including stimulus checks and emergency rental assistance. The deficit amounted to approximately 13% of GDP and accounted for the second largest deficit since the end of World War II. Deficits over the last five decades have averaged just 3% of GDP. But the brakes haven't hit the labor market quite yet. The latest weekly unemployment report shows that initial jobless claims have dropped to a three-and-a-half month low, which is close to a record low. There were 6,000 fewer applications for unemployment benefits, compared to the week before. They were down to 222,000. The low point was last March with 166,000 new claims. (2) Mortgage Rates Another pain point related to inflation is the cost of a home loan. Freddie Mac says the average 30-year fixed-rate mortgage was up 23 basis points to 5.89% last week. The 15-year was up 18 points to 5.16%. Freddie says that the rates vary quite a bit from one lender to another so it's wise to shop around. (3) In other news making headlines… Bank of America No-Down Loan Bank of America is launching a new program for first-time homebuyers that includes no down payment, no closing costs, and no mortgage insurance. It's called the BofA's Community Affordable Loan Solution, and is designed to expand homeownership opportunities for minorities. (4) Applicants will not have to have a minimum credit score. Instead, they will be able to qualify based on other data, such as payment histories for things like rent, utilities, phone, and auto insurance. Income and home location will also be considered. And they will have to complete a homebuyer certification course that is provided by BofA and HUD-approved counseling partners. Personally, I find it interesting that a no-money down loan would be offered now, so late in the housing cycle. Housing is teetering on a precipice, with some markets already seeing price declines. In my opinion, this is not a wise time to bring on a loan like this, so hopefully the bankers and borrowers will be very careful not to issue these loans in markets that are currently over-priced and potentially repricing. Tomo's Solution to the Appraisal Gap Fintech mortgage company Tomo is offering a solution to the deal-killing appraisal gap. That's when a borrower is approved for a certain loan amount, and the home then appraises for more than the buyer had planned to borrow. This last week, Tomo announced its new Tomo Appraisal Coverage. Buyers can get the coverage by getting an underwritten pre-approval from Tomo Mortgage. They must also put a minimum of 10% down, and work with a Tomo partner who will run the address through a verification process before an offer is made. (5) Other exclusions include foreclo

It looks like the pandemic housing boom is coming to an end. More and more sellers are slashing prices as mortgage rates rise and homes become less affordable for potential buyers. Some analysts are predicting that home values will drop by as much as 20% in markets that have gone up the most. And there are five markets at the top of that list. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Real estate experts are calling these overvalued markets "zoom towns" because they experienced rapid price growth during the pandemic. According to Rick Palacios at John Burns Real Estate consulting, home prices in Boise, Idaho, will be the first to get slammed. Palacios says: "It is the single market that we anticipate actually getting to price declines in 2022." (1) The Rise of Zoom Towns He says Boise attracted a lot of new residents during the pandemic because of its lower cost of living and quality of life, but that drove prices sky high. The other four cities on his list of zoom towns that will see sharp price corrections are Austin, Texas; Nashville, Tennessee; Phoenix, Arizona; and Sacramento, California. A Redfin analysis shows that Boise home prices increased 60% over the course of the pandemic, and it's now getting hit pretty hard by the market slowdown. Redfin says in July of last year, 30% of the listing prices were cut. That percentage has now more than doubled to 70% in July of this year. Data collected by John Burns shows that month-over-month prices are falling in Boise. It predicts that Boise will be the first metro to show a year-over-year decline in home prices. But Boise isn't alone. Top Metros for Home Price Growth As reported by Fortune, the West is the epicenter of the pandemic housing boom, and is now shifting rapidly. In July, 58% of listings in Denver experienced price cuts along with 56% of listings in Salt Lake City, 55% in Tacoma, Washington, 50% in Phoenix and San Diego, and 47% in Stockton, California. And that's just at the top of the list. (2) Zonda's chief economist, Ali Wolf, says: "The strong demand over the past two years drove up home prices across the country, and it appears the West hit the pricing ceiling quicker than other markets given the particular supply constraints." In other words, a combination of high demand, bidding wars, and tight inventory pushed prices in this area beyond what homebuyers are willing to pay. Forecast on Home Price Declines So the market is cooling the fastest while inventory is rising in what have been pandemic zoom towns. Moody's Analytics is expecting price declines of 0 to 5% during the slowdown. But it expects declines of 5 to 10% in the 187 markets that it says are "significantly overvalued." If we have a recession, the declines will be more like 15 to 20%. It's good to remember that we're still seeing year-over-year growth nationally, but it is slowing down every month. And depending on when you bought property, that could be a problem if you currently want to sell that same property. For example, if gains are dropping from 20% in January to 10% in July, and continuing in a downward slide, recent buyers could lose equity if they sell right now. It depends on the market and how much home prices have gone up recently. The markets I previously mentioned are expected to get hit by big price declines, along with others like Miami and Las Vegas. Selling homes in those markets during the current slowdown will likely result in the loss of equity. Those planning to hold on to their homes don't need to worry since they just want a place to live, and values will likely recover over time. The buyers who locked-in low mortgage rates are also in even better shape. You'll find a link to the articles mentioned in the show notes at newsforinvestors.com. If you'd like to learn more about owning single-family rentals, please hit the join link at the website. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://nypost.com/2022/09/05/us-zoom-towns-will-get-hit-with-falling-home-prices-expert/ 2 -https://fortune.com/2022/09/04/housing-market-map-home-price-cuts-redfin/

Proptech startup Pacaso is taking its public relations strategy to the next level. The San Francisco-based company helps people buy the second home of their dreams with a co-ownership model that has sparked a lot of controversy in some places. While the general perception of Pacaso is a belief that it contributes to the housing crisis, Pacaso is showcasing its model as part of the "solution." Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Pacaso has caused a dust-up in several places as full-time residents fight back against short-term rentals. Many critics see Pacaso through this lens, but it's not a short-term rental operation. Instead of renting the home out to a stream of different occupants over the days, weeks, months, and years, Pacaso homes are purchased by up to eight buyers and each buyer gets to use the home for a percentage of the year that corresponds to the buyer's percentage of the purchase price. Pacaso manages and maintains the home, but the people who use it are co-owners, who use it on a continual basis. (1) Pacaso as Part of the Solution The message that Pacaso is currently trying to convey is that many people own second homes that sit empty and unused for 90% of the year. With the current shortage of available homes, Pacaso points out that the typical second-home approach is wasteful. It says that co-ownership can help reduce that waste by combining the use of up to eight second homes into one home that has as many as eight owners. As Pacaso's vice president of public affairs, Colin Tooze (tooz), said in a press release: "One significant, but less-discussed, contributor to the housing crisis is a wasteful legacy model of second-home ownership. While no company can solve this complex set of problems on its own, Pacaso offers a sustainable alternative that combines multiple families into one luxury home." (2) Pacaso also claims that the co-ownership model provides significant benefits to the community in the form of economic activity that is ten times what you'd get with the typical second home. But Pacaso says it is still working on ways to publicize its value, which is why the company recently announced the formation of a bipartisan government advisory board. Formation of Government Advisory Board Pacaso says it's a priority to work collaboratively with elected officials, and the board will help the company do that more effectively. Among the inaugural members of the board are current and former elected officials from major metros around the country, including: 1 - Steve Benjamin (Chair), Former Mayor of Columbia, South Carolina, and past President of the US Conference of Mayors 2 - Steve Adler, Mayor of Austin, Texas 3 - Michael Hancock, Mayor of Denver, Colorado 4 - Danny Perez, Member, Florida House of Representatives 5 - Alexis Podesta, Former California Secretary of Business, Consumer Services, and Housing In a statement issued by the board chairman, Steve Benjamin, says: "Pacaso's innovative second home co-ownership model is a value-add to communities across the United States," said Steve Benjamin, former Mayor of Columbia, SC and past President of the US Conference of Mayors. "Pacaso consolidates second home demand into fewer homes, taking pressure off of housing inventory for first-time home buyers and middle class families. This is the thoughtful and sustainable approach to housing we need right now, and I'm proud to help advise the company as it works to bring this model to more communities." (3) Pacaso Reached Unicorn Status in Six Months Pacaso launched in October of 2020 as demand for second homes skyrocketed during the pandemic. As reported by Fortune, it reached unicorn status just six months later. That means it was worth more than $1 billion in just six months! Tooze told Fortune that he wants Pacaso homes to be good neighbors, and the board will help solve any challenges. He says: "If that helps us be more thoughtful in how we approach solutions that address the needs of the company and communities where we operate, everyone wins." (4) You'll find a link to the Pacaso articles in the show notes at newsforinvestors.com. If you'd like to learn more about owning single-family rentals in growing markets around the country, please hit the join link on our website. And please remember to subscribe to our podcast, and leave a review! It will help make us more visible on podcast platforms. Thank you! And thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.pacaso.com/?utm_source=google&utm_medium=Paid_Search&utm_campaign=IV_G_Brand_Search_Trademark_US&gclid=Cj0KCQjwmdGYBhDRARIsABmSEeMLqsfM0Xrakmhe3TXbxXKnbi-9-xd6FMRwUp8NAWa8l6dQ9Ae0dLsaArCzEALw_wcB 2 -https://www.prnewswire.com/news-releases/pacaso-announces-government-advisory-board-301592515.html 3 -https://www.pacaso.com/blog/pacaso-government-advisory-board 4 -https://fortune.com/2022/09/02/modern-board-pacaso-second-homes/

In this Real Estate News Brief for the week ending September 3rd, 2022... why rate hikes might backfire, why economists are seeing a sharp increase in the housing supply, and what Elon Musk is saying about owning a tiny home in Texas. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. A paper released at the Jackson Hole Summit argues that the central bank cannot control inflation by rate hikes alone. Researchers from Johns Hopkins University and the Chicago Fed authored the report, and say rate hikes could make matters worse without a reduction in government spending. The federal debt is currently at 123% of GDP which is down slightly from early 2020 during the beginning of the pandemic, but it's much higher than it has been since the mid-1940's. As interest rates rise, so does the cost of that debt. (1) The latest reports on the job market, and manufacturing, both show that the economy is still in good shape. It's still growing, but at a slower pace. A report from the Institute for Supply Management shows that new orders and employment increased, and that inflation was down slightly. It says there's one red flag – that some companies have bloated inventories which could put them in a tough spot if the economy slows down any more. (2) Meantime, initial jobless claims dropped to a nine-week low of 232,000 which means there's no sign of any big layoffs. Economists say this is one of the best barometers for economic health. (3) Job openings also expanded to 11.2 million in July. That's up from 11 million in June. The unemployment rate is currently at 3.5%. (4) Home price growth was down in July. The S&P CoreLogic Case-Shiller 20-city index deceased from 20.5% in May to 18.6% in June. The national index was up a seasonally adjusted .3%, but that's the smallest increase in two years. (5) Money spent on residential construction was down .4% in July. Economists expected it to fall because builders have been cutting back on their plans. Year-over-year, construction spending is still up 8.5%. (6) Consumers are feeling much better about the economy, now that gas prices have gone down. The consumer confidence index jumped from 95.7 to 103.2 in August. That's the first time it's gone up in four months. (7) Mortgage Rates Mortgage rates are getting closer to the 6% level. Freddie Mac says the 30-year fixed-rate mortgage was up 11 basis points to an average of 5.66%. The 15-year was up 13 points to 3.98%. (8) Mortgage News Daily reports that the numbers from Freddie are way too low. It says the average is more like 6.23%. (9) In other news making headlines… Housing Supply to Increase Sharply Some economists expect to see a big increase in housing completions in the coming months. The Calculated Risk blog says that even while housing starts slow down, builders will be finishing up many of the homes currently in the pipeline. That includes single-family and multi-family homes. (10) Bill McBride at Calculated Risk is estimating a 10% increase in completions this year to almost 1.6 million. That's because there's an unusually high number of housing units under construction due to supply chain issues. FSBO Is Not Very Popular Right Now A high number of home sellers have decided to go with an agent, instead of doing the deal on their own. The National Association of Realtors says that FSBOs, which stands for "for sale by owner," typically rise during hot markets, but the latest Profile of Home Buyers and Sellers shows the opposite. FSBOs were just 7% of home sales last year. That's the lowest percentage in about 30 years. 15 years ago, 12% of sellers decided to go it alone. (11) The report says that sellers are finding value in the hiring of real estate professionals. Among the benefits is the competitive pricing of a home, help with marketing to potential buyers, and negotiating the deal. Elon Musk Does, In Fact, Own a Boxabl Casita There's been much speculation as to whether Tesla and SpaceX founder, Elon Musk, had downsized into a Boxabl Casita. We did a news story on this modular home several months ago, and there were rumors about Musk living in one near his SpaceX facility in Texas. In a recent interview, he confirmed the purchase of one of these homes, but said he uses it as a guest house, and not as his primary residence. The basic model is 375 square feet in size and folds up for delivery. It only takes a few hours to set up and costs about $50,000. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! If you haven't yet joined RealWealth, just hit the "join for free" button on our website. You'll get access to our rental market data, our investor portal, and our network of real estate professionals including investment counselors, market specific property teams, lenders for investors, 1031 exchange facilitator

Orlando landlords are suing Orange County, Florida, to challenge a rent cap proposal that's headed for the November ballot. Attorneys for two major real estate groups filed the lawsuit in mid-August and are seeking an injunction to keep it from going before voters. They say the proposal violates state law which bans rent control under most circumstances. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. If the measure is approved, it would not apply to single-family rentals or vacation homes. It would only apply to multi-family units, and cap any rent increases to the rate of inflation as determined by the Consumer Price Index. The ordinance would last one year, and would need to be renewed by another vote to continue. But there's a very high bar that the county must reach to get this approved. According to state law, a city or jurisdiction must prove there's a housing emergency and that rent control would solve the problem before it can impose any kind of rent control. Ballot Measure Approved by Slim Margin In a 5 to 4 vote, county commissioners approved the ballot measure about a week before the lawsuit was filed. It was discussed and debated four times before it went to a vote. Both tenants and landlords went before the commission to argue their sides of the situation. Tenants cited skyrocketing rents that many say they can no longer afford. Landlords argued that higher tax bills, insurance premiums, and other expenses are forcing them to increase rents. Landlords Say Rent Control Will Make Matters Worse Florida Apartment Association representative, Amanda White, told the Orlando Sentinel that the proposed ordinance is "fundamentally flawed." She says: "It is unfortunate that a majority of the Orange County Commissioners disregarded (state) law and instead moved to place this measure on the ballot." The CEO of the Florida Realtors group, Margy Grant, told the Sentinel: "Studies show that rent control has unintended consequences that can make matters worse." She says: "A better solution would be to pursue public-private partnerships that result in more affordable housing units." Orange County Mayor Jerry Demings voted against the proposal, saying it will probably trigger a lawsuit that would be difficult for the county to defend because of the state law. And he was right. The county now faces a lawsuit, and attorneys representing the plaintiffs want to fast track the case to get the issue resolved before the election. Tenants Say They Can't Afford Rent Increases Among the arguments offered by tenants and rent-cap supporters is a 32% average increase in rent over a two-year span, from June of 2020 to June of this year. The average rent went from $1,357 to $1,799, according to rent-tracker CoStar. Tenant advocates also cited a high level of requests for rental assistance in Orange County. It was reportedly more than $200 million in federal, state, and local rental assistance funds, and the most among all of the counties in Florida. This is the first time that a local government in Florida has tried to impose rent control since the state law against rent control took effect. Lawyers arguing against the proposal say: "It is extremely unlikely that the shortcomings of the current residential rental market in Orange County… be deemed the type of dire emergency which must exist before a local government in Florida can adopt an enforceable rent control ordinance." Of course, this lawsuit is being closely watched by other jurisdictions. A headline in another publication asks whether Miami will be next. The city of Miami Beach does have rent control that was implemented back in the 60's and 70's before the state law was passed. (2) You'll find a link to the Orlando Sentinel article in the show notes at newsforinvestors.com. If you'd like to learn more about owning single-family rentals, please hit the join link on our website. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.orlandosentinel.com/news/orange-county/os-ne-orange-rent-control-lawsuit-20220817-4bmmdtmq5zbq3e4zj5tij4imti-story.html 2 -https://fortune.com/2022/08/20/florida-landlords-try-to-halt-rent-control-initiative/

Tenant advocates are asking the White House for help in curbing what they call "rent inflation." A coalition of tenant unions, community organizations, and legal groups is asking the Biden administration to declare a state of emergency and investigate ways to regulate rents. As reported by the Washington Post, these groups want the government to address rent growth with the same urgency as it has with high gas prices. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The coalition sent a proposal that would involve six government agencies for an "all-out government intervention" on rent inflation. The Consumer Price Index shows that overall annual inflation hit 9.1% in June, which is a 40-year high. That includes food and energy, which helped drive that number to a record high, along with housing costs. According to data firm Yardi Matrix, the year-over-year rate of inflation for multi-family rents was 12.6% in July. For single-family detached homes, CoreLogic reports that the annual rate was 12.8% in June. And some hot rental markets have seen much higher rates of rent growth, such as Miami with a June year-over-year reading of 35.5% for single-family homes. On economist told the Post that it's important that policymakers address the issue of high prices for necessities. He says: "At this point, we're talking about food, gasoline, and housing." Call for Immediate Action Just recently, the Biden administration addressed the high price of gas with a release of oil from the national reserve. Congress was also asked to consider a gas tax holiday, but that hasn't materialized. The coalition says the high price for housing is also an economic crisis and needs the same kind of attention. It wrote in a memo: "We urge the President to act immediately to regulate rents, as part of the Administration's efforts to curb inflation, and as a critical foundation for long term protections to correct the imbalance of power between tenants and their landlords." The appeal is part of an effort called "Homes Guarantee" which has a website. You'll find a link in the show notes. The main message is: "Everyone living in the United States should have safe, accessible, sustainable, and permanently affordable housing: A Homes Guarantee." It says that "currently, a team of 75 directly impacted tenant leaders representing over 25 organizations are building our federal campaign with a focus on executive and agency actions to regulate rents and address the rent inflation crisis." Potential Rent Regulations In addition to the emergency declaration, the coalition wants President Biden to convene a cabinet-level interagency task force to identify possible rent regulations. The document mentions enforceable affordability, quality housing standards, and legal representation for tenants facing eviction. The agencies it calls upon to help impose these regulations include the Federal Housing Finance Agency, the Federal Trade Commission, HUD, the Securities and Exchange Commission, The Department of the Treasury, and The Consumer Financial Protection Bureau. High Rents Due to Housing Shortage Although there are some landlords who impose unreasonable rent increases, it's not just greedy landlords who are at fault. As the Post reports, one of the big reasons for the high cost of housing is the housing shortage. The U.S. needs as many as five million more residential units to meet demand. The White House has introduced a "Housing Supply Action Plan" which would close the gap in another five years. But that doesn't help tenants right now. The Federal Reserve is the one that is tasked with bringing down inflation, and it's doing that with incremental interest rate hikes which don't target the housing market specifically. The Value of a Good Tenant Many of the mom and pop investors we work with at RealWealth know the value of a good tenant and the results of fair rent levels. Although rent increases are often necessary for a rental business to remain in operation, it's not wise or even ethical to impose unrealistically high rents on tenants. We just put together a Conscious Capitalism statement at RealWealth that addresses that issue. Conscious Capitalism refers to a socially responsible economic and political philosophy. At RealWealth, we believe that landlords need to be sensitive to tenant needs, and that above market rent increases do not show sensitivity. They can also lead to highly restrictive rent controls which is what this coalition would like to see at the federal level. If you are a landlord, or even a tenant, you must know that rent control is bad for everyone because it limits what landlords can do to maintain their properties for the tenants' wellbeing. And it discourages landlords from wanting to remain in business, which is bad for the housing supply. As RealWealth Investment Counselor, Joe Torre, said in our Conscious Capitalism statement: "If you try

In this Real Estate News Brief for the week ending August 27th, 2022... the Fed Chief's Jackson Hole message on rate hikes, the July dip in inflation, and why some home buyers say they have regrets. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Economic News We begin with economic news from this past week. Federal Reserve Chief Jerome Powell shook things up with some hawkish remarks in a speech at Jackson Hole. His comments triggered a major stock market sell-off with the Dow dropping more than 1,000 points. Powell's speech focused on the central bank's responsibility and resolve to get inflation back down to the 2% level. He said that could include another three-quarter point rate hike at the Fed's September meeting, but Powell said the size of the rate hike will depend on all the totality of the data between now and then. (1) He also warned that households and businesses will feel some pain because of higher interest rates, slower growth, and softer labor market conditions, but doubled down on the need to continue with tight monetary policy for an extended length of time. Some economists believe that means "no" rate cuts in 2023, even if inflation has settled back down. The Federal Funds rate is currently between 2.25% and 2.5% which Powell calls "neutral." The Fed committee is expecting that rate hikes will bring it close to the 4% level, and it will remain there through the end of next year. But he says the Committee may offer a new prediction at the upcoming September meeting. Powell's speech came just after the latest report on the PCE or personal consumption expenditures index. That's the central bank's preferred gauge for inflation. The report shows inflation was down .1% in July, mostly due to lower gas prices. That brings the annual PCE down from 6.8% to 6.3%. (2) Powell responded to the report saying: "A single month's improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down." Meantime, the government issued an update on the second quarter GDP. It had initially said the economy contracted .9% but the revision shows it shrank .6%. The main reason for the upward revision is that consumer spending and business investment was stronger than previously reported. Business profits were also positive, after a decline in the first quarter. As MarketWatch reports, they were up 6.1% in Q2. That's good news because when companies are profitable, there's little incentive for layoffs. (3) The weekly jobless report also shows that layoffs remain near record lows. New jobless claims were down to a one-month low of 243,000. They've been as low as 166,000 in March, which is the second-lowest level ever. The summer high point was 261,000, but they've been edging lower since then. Moving on to home sales and the housing market slowdown. New home sales were down in July to their lowest level since January 2016. They fell 12.6% from an annual rate of 585,000 in June to 511,000 in July. Year-over-year, sales are down 29.6%. (4) Although that sounds bad, the housing market has been way too hot for quite some time. The slowdown will help slow home price growth, and bring the market back toward normal. Existing home sales are also down. The National Association of Realtors reports that they fell 1% in July compared to June. But that's less than the 3% drop that analysts polled by the Wall Street Journal had expected. Year-over-year, existing home sales are down 19.9%. NAR's chief economist Lawrence Yun says: "In terms of the current housing cycle, we may be at or close to the bottom in contract signings." He says the smaller than expected drop is likely reflecting the stabilization of mortgage rates. (5) Mortgage Rates Mortgage rates had been bouncing around a bit near the 5% mark, but this last week, they shot up closer to 6%, which may not sound like they are stabilizing. Freddie Mac says the average 30-year fixed-rate mortgage was 42 basis points higher to a rate of 5.55%. The 15-year was up 30 points to 4.85%. (6) NAR economist, Nadia Evangelou, says that higher mortgage rates are hurting buyers more than higher home prices. She says a one percent increase in the mortgage rate is like a 13% increase in home price. (7) In other news making headlines… Homebuyer Regrets The sizzling hot housing market we've seen in the last couple of years had resulted in a high number of remorseful homebuyers. A survey by Clever Real Estate shows that 72% of buyers have regrets about what they purchased. Of those remorseful buyers, 66% were millennial first-time buyers who were in a rush to settle down and raise a family. About 1,000 people participated in the survey and had bought a home in either 2021 or 2022. 88% of those people said they were up against stiff competition which had an impact o

Buildable lots have been in short supply this year, but data from one real estate company expects that to improve next year. Zonda's New Home Lot Supply Index shows the year-over-year supply has decreased across the U.S. As of Q2, it was down 9.3%, but it doesn't take into account lots under development, which are up substantially compared to last year. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Zonda's chief economist, Ali Wolf, says: "While vacant developed lot inventory tightened slightly in the second quarter, the key number to track going forward is lots under development, which are up 28% compared to last year." (1) 10% Year-Over-Year Decline The New Home Lot Supply Index came in at 38 for the second quarter, which represents a 2.2% decline from the first quarter and a 9.3% decline from the second quarter of last year. Zonda says that "nationally, the 2022 data reflects a significantly undersupplied market" and that most major metropolitan areas are experiencing this tight supply. The report says that almost all the top major markets are "significantly undersupplied." The three areas where lot supply has declined the most on a year-over-year basis are in Jacksonville, Florida; Miami, and Denver. Jacksonville and Miami are also among the three with the tightest lot supply right now. San Diego is the third metro with the lowest inventory. Areas where the lot supply grew the most from Q1 to Q2 include Los Angeles and Orange County at 17%. Boise, Idaho, was also up 15%. Expected Rise in Lot Supply Next Year Finding buildable lots should be easier in 2023 because of the big increase in lot development. Zonda says that 71% of the upcoming lots are in the excavation stage and should be available for development in the first half of next year. Over the last few years, homebuilding activity has been impacted by labor and materials shortages, along with a tight inventory of buildable lots. Now that more lots are in the pipeline, it appears that home buyer demand could impact the pace of residential construction. According to Wolf: "The housing market was moving a mile a minute heading into 2022." She says: "What we've seen is that consumers have responded to higher home prices and mortgage rates by slowing demand. Housing starts are tied to housing demand, and 87% of the builders surveyed by Zonda anticipate slowing new construction in response to the shifting market. You'll find a link to Zonda's report on lot inventory in the show notes at newsforinvestors.com. Please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.prweb.com/releases/new_home_lot_inventory_remains_tight_in_2q22_zonda_reports/prweb18839151.htm

In this Real Estate News Brief for the week ending August 20th, 2022... a big plunge in home sales, rent increase impact on tenants, and Airbnb's new anti-party technology. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Economic News We begin with economic news from this past week, and a big drop in residential construction activity. The Commerce Department says that housing starts were down 9.6% year-over-year in July to their lowest level since early last year. Building permits also fell in July. They were down 1.3% compared to June. (1) HousingWire Data Analyst, Logan Mohtashami, says that homebuilders are pulling back until mortgage rates fall and home-buying activity picks up again. (2) One reason that home builders are pulling back is the cancellation rate among buyers. A survey by John Burns Real Estate Consulting shows that the cancellation rate has more than doubled since April to 17.6% in July. The firm's data also shows a 16% cancellation rate for existing home sales or about 63,000 deals that fell through. (3) Some of the highest cancellation rates are in Florida along with Las Vegas and San Antonio. Why the high cancellation rate? As CNBC reports, there are two main reasons. One is that some buyers no longer qualify for a loan with a higher interest rate. The second is that homebuyers are worried about inflation and the possibility that home values might drop so they are simply walking away from their deals. The situation has rattled home builder confidence. The National Association of Homebuilders monthly confidence index dropped below 50 in August, which is the midpoint between negative and positive sentiment. The last time it fell below 50 was at the beginning of the pandemic. One year ago, it was 75. (4) Homebuilders are describing the situation as a "housing recession." Existing home sales were also down again, for a sixth straight month. The National Association of Realtors says that sales fell 5.9% in July to a seasonally adjusted annual rate of 4.81 million. If you exclude the pandemic, that's the weakest sales activity since November 2015. Although inventory was up 4.8%, there's still just a 3.3 month supply of homes, and with an average 14 days on the market. (5) The job market remains stable. Initial jobless claims were down a few thousand to a total of 250,000. Economists say the economy has slowed down because of rising interest rates, but there's no surge in lay-offs because the economy is still growing, and companies want to hold on to their employees.. (6) Mortgage Rates Mortgage rates dipped a little. Freddie Mac says the average 30-year fixed-rate mortgage was down nine basis points to 5.13% The 15-year was down 4 points to 4.55%. (7) In other news making headlines... Building Material Prices Move Higher The cost of building materials moved higher in July led by a surge in concrete prices. The National Association of Home Builders says that building materials were up .4%, while concrete prices shot up 2.5%. (8) The NAHB says that ready-mix concrete prices have gone up in 17 of the last 18 months and now costs about 35% more than it did before the pandemic. That's similar to the total price increase for all building materials combined during the same time period. Rent Increase Impact on Tenants Inflation is making it difficult for tenants to keep up with their rent payments. Freddie Mac conducted a survey that shows almost all of them have been impacted by higher prices, and that 60% of them have experienced a rent increase in the past year. 40% of those tenants say they are somewhat likely to miss a rent payment while 20% say they are extremely likely to miss a payment. (9) The survey also asked about the size of the rent increases. About a quarter of the survey participants said that rent went up 10% or less. 15% said it went up 10% or more. 11% said rents were more than 20% higher. 6% said the increase was more than 30%. Airbnb's New U.S. Anti-Party Technology Airbnb has launched new anti-party tools in the U.S. and Canada. The tools will help identify users who appear to be organizing a party. The technology will look for red flags including any negative reviews on Airbnb, whether the user is local, the length of the reservation, and whether it's a weekend or a weekday. (10) Airbnb has been testing these tools in Australia since October of last year, and has found that they are very effective. The company says there was a 35% drop in unauthorized parties while the pilot program was in effect. The company says this new system is more robust than the "under-25 system" that is currently in place in the U.S. That program is mostly focused on people under the age of 25 without any positive reviews and are booking an Airbnb locally, indicating a possible desire to hold a party with their friends. That'

In this Real Estate News Brief for the week ending August 13, 2022… a surprise inflation report, how that might impact mortgage rates, and a solution for the housing crisis involving women and immigrants. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. The report on the Consumer Price Index, or CPI, shows a bigger-than-expected decline in July. According to the Labor Department, the annual rate of inflation dropped from 9.1% to 8.5%. Economists surveyed by Dow Jones had expected a reading of 8.7%. The decrease was mostly due to a big drop in gas prices. The core rate, which omits prices for fuel and food, was also better than expected at 5.9%. (1) Producer prices also put on the brakes in July. That index was down .5% after a 1% jump in June. As reported by Market Watch, it's the first drop in producer prices since April of 2020. (2) Jobless claims were up by about 14,000 to a total of 262,000 new claims for the week. There's been a slow increase in applications as the Fed tightens its monetary policy and companies tighten their belts, slightly. Stuart Hoffman at PNC Financial told CNBC: "The rise in initial claims since early April is a cool breeze blowing over a hot labor market." Continuing claims also rose to a total of about 1.43 million. (3) Consumers are feeling a little better about the economy because of falling gas prices. The University of Michigan's Consumer Sentiment Index was up four points to 55.1 in August. MarketWatch reports that lower gas prices have put consumers in a better mood but they are still concerned about the cost of things like food and rent. (4) Mortgage Rates Mortgage rates also jumped back over 5% last week. Freddie Mac says the average 30-year fixed-rate mortgage rose 21 basis points to 5.22%. The 15-year was 4.59%. Freddie says: "Although rates continue to fluctuate, recent data suggests that the housing market is stabilizing as it transitions from a surge of activity during the pandemic to a more balanced market." (5) In other news making headlines… NAR: Mortgage Rates May Have Topped Out The latest inflation reports have led some economists to believe that we won't see mortgages go much higher than they are now. The Chief Economist for the National Association of Realtors, Lawrence Yun, believes that the worst of the situation is now behind us. (6) He said in a realtor.com blog: "If there is a sustained decline in gasoline prices and more production of apartments and single-family homes, consumer prices will pull back, encouraging the Federal Reserve policy to be less aggressive." And that: "Mortgage rates will fall." Auction.com: Foreclosure Spike Expected Foreclosure activity is expected to increase over the next 12 months, as pandemic-related protections expire for seriously delinquent homeowners. The information comes from a survey by Auction.com with dozens of clients. (7) The survey shows that nine in 10 mortgage servicers are expecting more foreclosures. 74% expect a "slight increase" while 15% expect a "substantial increase." The expected foreclosure rate is below historical averages nationwide but some clients expect 30% or more of their delinquent inventory to end up in foreclosure. The survey shows that the loans most likely to foreclose are government-insured loans and properties in the Midwest. Women & Immigrants to the Rescue! Getting more women and immigrants interested in the construction industry could help solve the housing crisis. Home builders have been dealing with a severe labor shortage, and a Harvard researcher told members of Congress recently, that the industry could expand its workforce by promoting the industry to women and immigrants. (8) Harvard's Christopher Herbert says the industry is "overwhelmingly male" and needs more women on the job. He also pointed out that 20 years ago "we built two million homes a year… and a lot of that was through immigration." Currently, about 25% of workers are immigrants although some states, like California and Texas, have a much higher percentage. About 11% of construction workers are women. That's it for today. If you'd like to read more about any of these topics, check the show notes (below) for links at newsforinvestors.com. And please remember to hit the subscribe button, and leave a review! If you haven't yet joined RealWealth, please sign up. It's free and will give you access to our members-only Investor Portal where you'll find data on specific markets, the property teams that we work with, and other resources. Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.marketwatch.com/story/coming-up-u-s-july-cpi-data-due-at-8-30-am-eastern-11660132986?mod=mw_latestnews 2 -https://www.marketwatch.com/story/u-s-producer-prices-moderate-in-july-11660221842?mod=bnbh_mwarticle 3 -https://www.marketwatch.com/story/u-s-jobless-claims-move-higher-in-latest-week

New home construction plunged in July, according to the Commerce Department. The reports shows that housing starts fell 9.1% in July to a seasonally adjusted annual rate of 1.45 million. That's down from a revised 1.6 million in June, and the lowest level of new home construction since the start of the pandemic in 2020. (1) I'm Kathy Fettke. Single-family construction was down even more, at 10.1%. Permits for new homes were also down 1.3%. But the regional numbers are wildly different, with the Northeast seeing a 65.6% increase in total housing starts. The other three regions account for the big drop. Builders say more homebuyers are canceling contracts because of high prices for homes, mortgages, and the cost of living in general. One in five says they have reduced their home prices in the past month to limit contract cancellations. The Commerce Department says the average cost to build a home has gone up almost 38% since January of 2020. That, along with rising mortgage rates, and supply-chain issues that cost both time and money, are discouraging many homebuyers. The National Association of Home Builders Chairman Jerry Konter describes the current market as a "housing recession." But Chief Economist for the National Association of Realtors, Lawrence Yun, says there is a silver lining. With inflation showing signs of a peak, and mortgage rates potentially stabilizing around 5%, he expects renewed buyer activity – especially given the demand for housing and the shortage of homes. (2) Yun says: "Homebuilders are naturally very cautious about rising unsold inventory during the construction phase. But those completed homes are finding buyers within three months." He also sees less uncertainty in the housing market as supply chain issues ease up for things like lumber and appliances. Rapidly rising rents are also providing strong incentives for the construction of rental housing. You'll find a link to the Commerce Department report in the show notes at newsforinvestors.com. Please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.census.gov/construction/nrc/pdf/newresconst.pdf 2 - https://magazine.realtor/daily-news/2022/08/16/builders-concerned-about-sudden-pullback-in-new-home-market

A Finnish company is hoping to give U.S. home buyers something they've been craving! Real estate software company CubiCasa just launched a product in the U.S. that produces a FREE floor plan that sellers can put into for-sale listings. According to the National Association of Realtors, it's something that just 10 to 15% of U.S. listings include right now, but it's third on a list of desirable listing features! Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Clear Capital purchased CubiCasa last September, so it's now a subsidiary of Clear Capital, but it operates independently. CubiCasa says on its website that it's the market leader for this kind of software in its home country, and is already being used in more than 170 countries around the world. With its introduction into the U.S., it says it's one of the major players here and will help revolutionize the home-buying experience. (1) Market Properties More Effectively with Floor Plans The president of CubiCasa, Jeff Allen, says: "By offering a free version of our mobile scanning technology in the U.S., we're helping potential buyers make more informed decisions, while empowering agents and sellers to market their properties more effectively." He also says: "It's time the U.S. caught up" with the rest of the world. (2) CubiCasa says it has already provided more than one million floor plans to homeowners and sellers internationally. It operates with the use of an app on your smartphone. After putting in your location, you point the camera towards the lower part of the walls where they intersect with the floor, and record the layout as you walk around the home. There are specific instructions for doing it properly, such as how you hold the camera, what part of the interior you should be recording, and how you should walk in and out of spaces. After you are done collecting all the visual information, the sketching technology takes about 24 hours to produce a finished floor plan. You can also pay a small amount to have additional features incorporated into the floor plan, such as kitchen cabinets, bathroom features, furniture and appliances. If you want your floor plan produced more quickly, it costs an extra $10 to get it within six hours. Do Floor Plans Violate an Architect's Copyright? CubiCasa says the app will accurately calculate the square footage of a home, and that this will improve the quality of property data and inspection reports. Although floor plans are quite common in real estate markets around the world, they've been more of a niche market here. And there has been some question about potential copyright violations. In Missouri, the architects at Designworks Homes sued Columbia House of Brokers Realty over the use of floor plans in listings. The case evolved from the listing of a home in 2010 and a floor plan produced by the sellers. When the architects discovered the use of the floor plan, they sued for copyright infringement. Last year, they won their case in a lower court, but the Realty appealed to the Supreme Court. NAR also filed an amicus brief in support of the Realty, arguing that the ruling misrepresents federal law, puts decades of a legal precedent at risk, eliminates a long-standing practice in the real estate market, and makes many homeowners vulnerable to lawsuits if they have used floor plans to sell their homes in the past. (3) Supreme Court Rejects Floor Plan Case The Supreme Court declined to review the case however, saying the two sides have not presented compelling reasons to do so. But more recently, the Seventh Circuit ruled against the same architectural company in another lawsuit. It affirmed a lower court's ruling against the plaintiff saying that a floor plan must be "virtually identical" to the architect's drawing to be considered a violation of the copyright. NAR says that "many homebuyers rely on floor plans in real estate to decide whether to purchase a residence, and their ability to secure financing for that transaction is often contingent on an appraisal that requires the reaction of a floor plan." (4) Homeowners also make floor plans to help them decide on where they want furniture or how they want to renovate a home. Plus, many jurisdictions also want to see a floor plan before they approve a renovation project. The legal dust-up has apparently settled enough so that CubiCasa feels confident about launching in the U.S. If you want to check it out, you'll find links in the show notes at newsforinvestors.com. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.cubi.casa/about/ 2 -https://www.housingwire.com/articles/this-app-lets-homeowners-generate-floor-plans-of-their-homes-for-free/ 3 -https://www.nar.realtor/newsroom/nar-asks-supreme-court-to-protect-consumers-from-lawsuits-when-making-floor-plans-of-their-homes 4 -https://www.nar.realtor/newsroom/

Housing costs have surged over the last year or so, but a new report shows that demand is still strong due to several factors, and that pricing pressures may ease up in the months ahead. The Joint Center for Housing Studies at Harvard University just released its annual State of the Nation's Housing report, and I'd like to share some of the highlights. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Home Price Appreciation Nationwide home price appreciation hit 20.6% in March of this year. That's up from 20% in August of last year. The data shows record-high appreciation in 67 of the top 100 markets, and the rest were also up by at least 9%. Harvard researchers say higher home prices are keeping about 4 million renters from buying their own homes, and that increases demand for rental housing. (1) Those who can qualify for a home often can't find one in their price range. They are also competing with investors who have increased their share of moderately-priced homes. Single-Family Investor Sales Researchers say investors have moved aggressively into the single-family rental market and account for 28% of the SFR homes sold in the first quarter of this year. That's up from 19% in the first quarter of last year. From 2017 to 2019, the average was about 17%. Investors have been focusing on markets with rapid price appreciation. In Atlanta, the investor share of home sales was 41% in the fourth quarter of last year. In San Jose, California, it was 38%. In Phoenix, 36%, and in Los Angeles, 34%. Demand & Rent Growth As demand rose for rentals, so did rents. The report shows they were up 12% nationally in the first quarter. Rent growth was more than 20% in several metros. The hottest markets were in the South and West, but some coastal areas saw big gains because rents had fallen so much during the pandemic. Single-family rents have gone up faster than apartments mostly due to demand. That's the result of remote workers who want more space at home. CoreLogic shows that year-over-year rents were up 15% nationally as of March. The biggest gains were in Miami at 39% and Cape Coral at 28%, but Phoenix and San Diego were also mentioned with rent growth of 18 and 17% respectively. Strong Household Formation Strong household formation is contributing to increased demand and higher housing costs. From Q1 of 2020 to Q1 of 2022, new households were forming at an annual rate of 1.6 million. Harvard researchers had predicted an increase of 1.2 million annually from 2018 through 2028, so the current rate of increase is well above the expected amount. Much of the growth is due to millennials making up for previous delays in household formation. Government stimulus during the pandemic and the economic rebound last year also gave many young adults the means to pay for housing. But researchers are also predicting a new slowdown in household formation as the money situation tightens to control inflation. New household formation has raised the homeownership rate .1% to 65.4%. Residential Construction The pace of residential construction is finally picking up. It has been trailing behind household growth for many years, but in 2021, single-family starts hit 1.1 million. That's the first time it's been above 1 million in 13 years. Multifamily starts are also up. They hit 470,000 which is a 30-year high. The big issue for builders has been all the supply chain disruptions. In April of this year, 1.64 million homes were under construction with delayed completion dates due to the supply chain hold-ups. The labor shortage and local land use regulations have also made it difficult for builders. Affordability Crisis & Outlook The affordability crisis has continued to get worse for both homeowners and renters. In 2020, 30% of households were cost-burdened, meaning they were paying more than 30% of their income on housing. 14% were severely burdened. The figures are worse for renters. 46% were hard-pressed to pay their rent, and 24% were severely burdened. And now, inflation is making things worse. Although low-income families will continue to struggle with housing costs in the near term, the report says the outlook for overall housing demand is mostly positive. A lot depends on whether the Federal Reserve can control inflation, but Harvard researchers say that demographic shifts are favorable, unemployment is low, and wage growth is strong – which all contribute to a positive outlook. You'll find a link to the full report in the show notes for this episode at newsforinvestors.com. Please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1. https://www.jchs.harvard.edu/blog/across-nation-rising-prices-and-increased-interest-rates-limit-access-homeownership

We have a quick news update on today's inflation report. Investors have been waiting anxiously to see if inflation hit a peak in June and is now headed down, prompting the Fed to slow down on rate hikes. Well, we have good news. The report on the Consumer Price Index, or CPI, shows a bigger-than-expected decline in July. It shows that the annual rate of inflation dropped from 9.1% to 8.5%. Economists surveyed by Dow Jones had expected a reading of 8.7%. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The decrease was mostly due to a big drop in gas prices. The report says the gasoline index was down 7.7% which offset a rise in food and housing costs. When you look at the broader category of energy, that was down 4.6% because of a drop in gasoline and natural gas prices, but the index for electricity was higher. (1) The core rate of inflation, which excludes food and fuel, remained the same as it was in June at 5.9%, but that was a better reading than economists had expected. Shelter accounts for about 40% of the core rate and that was up 5.7% on an annual basis. Economists and stock traders had been predicting another .75% rate hike in September to help control inflation. But as CNBC reports, they now believe there's a better chance for just a half point rate hike. (2) Louis Navellier said in his podcast that he believes it could be a 75 basis rate hike still, but that it will most likely be the last one because it's rare to see rate hikes before an election. If that's the case, he's expecting a big stock market rally after September 21st. The Chief Economist at Jeffries, Aneta Markowska, told CNBC: "Things are moving in the right direction. This is the most encouraging report we've had in quite some time." She also agrees that it will take some pressure off Federal Reserve officials at their next meeting. You'll find a link to the full report in the show notes at newsforinvestors.com. Please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.bls.gov/news.release/cpi.nr0.htm 2 -https://www.cnbc.com/2022/08/10/consumer-prices-rose-8point5percent-in-july-less-than-expected-as-inflation-pressures-ease-a-bit.html