Real Estate News: Real Estate Investing Podcast

In this Real Estate News Brief for the week ending April 1st, 2023… new PCE numbers show inflation is weakening, where investors are reaping the biggest returns for single-family rentals, and how much apartment renters are saving if they don't buy. 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 favorable report on inflation. The Bureau of Economic Analysis released a report on the February Personal Consumption Index, or PCE, and it shows a mild .3% increase. That's down from a .6% increase in January, and suggests that the Fed may be getting the upper hand on high prices. With this report, the yearly rate dropped from 5.3% to 5%, which is the lowest it's been in more than a year and a half. (1) Senior Federal Reserve officials are suggesting that another quarter point rate hike is still needed, before they call for a pause. That would be decided at the Fed's next meeting in May as Fed officials also weigh the risk of further interest rate hikes on the banking system. The government revised their Q4 GDP for a third time. It was initially 2.9%. Last month, it was lowered to 2.7%. The government is now saying it was 2.6%. As MarketWatch reported, the GDP was reduced because data shows weaker consumer spending, and a decline in corporate profits. (2) The weekly jobless report shows 198,000 people applied for benefits. That's a three-week high, but it's still a very low number and indicates that the labor market remains strong in the face of high-interest rates and a potential recession. (3) Reports on housing include the latest Case-Shiller home price report. The national index fell .2% in January, while the 20-city index was down .4%. Year-over-year home prices are still 2.5% higher, but that's down from 4.6% last month. (4) Home buyers seem to be warming up to the idea of higher mortgage rates. The National Association of Realtors reports that pending sales were up for a third month in a row. They rose .8% in February. That's after a huge 8.1% surge in January. If you compare the numbers to one year ago, they are down 21.1%. (5) Mortgage Rates Mortgage rates didn't move much in the last week, but they remain at a lower level than recent highs. Freddie Mac says the average 30-year fixed-rate mortgage was down one point to 6.32%, which is essentially the same as the previous week. The 15-year dropped 12 points to 5.56%. (6) In other news making headlines… More Sellers Sitting on the Sidelines While it seems the spring buying season is producing a surge in buyers, and mortgage rates have come down slightly, sellers are still in a wait-and-see mode. Realtor.com says that new listings fell again in March, and are down 20% compared to a year ago. The active inventory is about 60% higher year-over-year, but that's because homes are taking longer to sell. Realtor.com says that homes are now sitting on the market for an average of 54 days. That's up from an average of 36 days last spring. Chief economist, Danielle Hale, says shoppers are very sensitive to mortgage rates and they "only jump back in the market when rates dip." She says rates will play a big role in whether the housing market "bumps along or picks up speed this year." Best Counties for Single-Family Rentals If you're trying to decide where you might get the best returns for a single-family rental, real estate data firm ATTOM just issued its Q1 2023 Single-Family Rental Market report. ATTOM analyzed 212 U.S. counties with a population of at least 100,000. The report shows the overall single-family rental yield increasing from last year in 91% of those counties. It was 6.7% last year, and rises to 7.5% this year. Rents are rising faster than home prices in many counties. CEO, Rob Barber says: "Rents for single-family homes are growing while prices have flattened out, which has helped boost yields for landlords for the first time in at least several years." Three of the top five counties for rental returns are in Florida, including River County, Florida, in the Sebastian-Vero Beach area; Collier County, Florida, in the Naples area; and Charlotte County, Florida, in the Punta Gorda area. A few other counties with high rental yields include Chicago's Cook County, Cleveland's Cuyahoga County, and West Palm Beach's Palm Beach County. Looking at the top 50 counties for rental returns: 29 are in the South, 13 are in the Midwest, eight are in the Northeast, and none are in the West. Big Savings for Apartment Renters The savings gap is growing for people who rent an apartment instead of buying a home. The National Multifamily Housing Council says it's now more than $1,000 dollars more expensive per month to buy a home than it is to rent an apartment – $1,176 to be exact. That's the widest gap in 15 years. (9) Apartment rent growth has been slowing. It was only up 2.6% in March and is now back to pre-pandemic levels.

In this Real Estate News Brief for the week ending March 25th, 2023... the Fed's latest rate hike, the impact of high rates on banks, and the top states for tenant migrations. 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 Federal Reserve hiked the short-term rate once again by a quarter point. The benchmark rate is now 4.75% to 5%. There had been speculation that we'd see a half point rate hike because inflation hasn't been coming down fast enough, but the failure of Silicon Valley Bank forced the central bank to be more cautious. (1) Fed Chief Jerome Powell said he was surprised at how quickly Silicon Valley Bank collapsed and even admitted that committee members considered a pause in rate hikes. Federal Reserve data shows that almost $100 billion were pulled from accounts during the week that ended March 15th. Most of that money came from small banks, while larger banks saw more of an inflow. Although depositors have been yanking money from smaller banks, Powell says the deposit drain from small banks has slowed down and the U.S. banking system is "sound and resilient." He says the Fed set up a powerful backstop for banks, allowing them to tap into an emergency loan program. (2) It's important to remember that FDIC-insured banks will guarantee deposits up to $250,000 and $500,000 for couples. If you have more than those amounts, you can protect yourself by keeping the maximum-insured amounts at different banks. Moving on to the job market… The weekly unemployment report shows another drop in claims for new benefits. Those applications declined to a three-week low of 191,000. That indicates that companies are not laying off employees in any great numbers, and that higher interest rates have "not" hit the job market, yet. (3) New home sales are up for a third month in a row, thanks to a dip in mortgage rates. They rose 1.1% to an annual rate of 640,000 in February. (4) And for the first time in 13 months, existing home sales were higher. According to the National Association of Realtors, they surged 14.5% last month to an annual rate of 4.58 million. NAR says the sale of single-family homes is the highest ever since the association began tracking those sales in 1999. As reported by MarketWatch, there's clearly a pent-up demand for homes as the spring home-buying season gets underway. (5) Mortgage Rates Mortgage rates slid closer to the 6% level this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 18 basis points to 6.42%. The 15-year dropped 22 points to 5.68%. (6) In other news making headlines... Small Bank Impact on Real Estate Pressure on small banks could make it harder to get a real estate loan. According to Goldman Sachs, there are about 4,800 small and mid-sized banks in the U.S. and they are often the go-to lenders for real estate loans, including a high percentage of construction loans. These smaller banks are responsible for 67% of commercial real estate loans and 37% of all residential real estate loans. (7) As reported by Axios, small banks had already started tightening their lending standards by the end of last year, but now economists are expecting more tightening. CoStar says about 40% of loan officers had tightened their lending standards for commercial real estate loans by Q4 of last year. Only about 5% said they were doing that in Q4 of 2021. Commercial real estate could face the biggest impact as property owners deal with low-interest loans that are maturing, and a whole lot of half-empty office space. Those loans will need to be renegotiated at higher rates, making it tough on property owners and their lenders loans become unaffordable. Study: 190 Small Banks Could Collapse One study projects the failure of 190 smaller banks if depositors decide to withdraw even half their uninsured amounts. The study was done by social Science Research Network and published in USA Today. (8) The report did not list the at-risk banks but described them as smaller banks with a total of $300 million in FDIC-insured deposits. They are at risk because the value of long-term investments, like government bonds and mortgage-backed securities, has gone down. Economists say if those values decline further, more of those smaller banks could be at risk. Spring Tenant Migration It isn't just the beginning of the spring home-buying season. Real estate insiders are expecting a huge number of renter migrations as well, and many of those renters are looking for homes in new cities. A study by Apartment List shows that 40% of tenants searched in a new metro last year, while 27% searched in a new state… and that many are considering long distance moves. (9) Apartment List says those long-distance moves tend to be more common among high-income renters, and that many of them are coming from California and New York. Those two states each lost abo

The Fed followed through on another rate hike despite the banking turmoil. Members of the Federal Open Market Committee raised the Federal Funds rate another quarter point on March 22nd. That brings the short term rate to a range of 4.75% to 5%. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Fed Chief Jerome Powell said the collapse of two banks, and the near-collapse of a third, did force Fed officials to consider a pause in rate hikes. But he says they were persuaded to hike rates again because of stubbornly high inflation and a strong job market with strong wage growth. But Powell offered assurances that the central bank is prepared to protect the banking system. He also still believes there's a path to a soft landing. (1) Powell says he expects the need for one more rate hike this year, while seven of the 18 Fed officials are forecasting two hikes. If the short-term rate is raised another quarter point, the end range would be 5% to 5.25%. Fed Sees Higher End-of-the-Year PCE Percentage The Fed previously thought Personal Consumption Expenditure index, or PCE, would end the year at 3.1%. It's now projecting a higher 3.3%, which is moving in the wrong direction from the central bank's 2% target. In the meantime, the Fed also needs to make sure the financial system remains stable. There's fear that nervous depositors could pull more money out of regional banks, which are already under stress. Federal regulators took control of Silicon Valley Bank and Signature Bank, and are making sure depositors get all their money back despite the FDIC limit of $250,000. The Fed also worked with the FDIC, and the U.S. Treasury in the creation of a fund for banks that need to borrow money to cover deposits. As reported by Bisnow, banks withdrew a total of $300 billion during the first week. Government Prepared to Prop Up Small Banks Treasury Secretary Janet Yellen also says the government is prepared to protect small banks from failures, but much of this stability depends on the confidence of depositors. Archie brown of Cincinnati-based First Financial Bank told Bisnow: "The main thing is to make sure that the Fed is instilling confidence in the deposit base. As long as we do that, I think everything else will manage itself." The San Francisco-based First Republic had teetered toward failure with a $70 billion run on deposits, which is about half of its total. The bank received an infusion of cash from eleven large banks and the federal government to keep it from toppling. But the experts are still worried about smaller regional banks which is where a lot of commercial real estate investors get their loans. According to an article in Axios, small and mid-sized banks hold 67% of commercial real estate loans, and 37% of residential real estate loans. (3) Small Banks Could Reduce Real Estate Exposure Brad Kraus of the CRE financial consulting first Ascension said in an email to Bisnow: "If banks do end up struggling, the first thing we see here on the front lines is a reduction in their real estate exposure." He said: "If things get worse, they simply start quoting rates which guarantee profitability, thus effectively pricing themselves out of the market." (4) Higher rates will push commercial real estate values lower. Keiran says: "Those looking to sell anytime soon, especially those owners that are facing loan maturities, will have to offer their deals at higher cap rates to attract buyers." According to the Wall Street Journal, as much as $270 billion in commercial mortgages will mature this year. As these loans mature Keiran expects to see a "major value adjustment" for commercial properties especially if we sink into a recession. Banks are also likely to cut back on lending as a way to preserve capital, especially if they expect the Fed to keep hiking rates. That's it for now. You'll find links in the show notes at newsforinvestors.com Please remember to join RealWealth. It's free to join and gives you an all-area pass to our website. That includes our investor portal, our market data, and our experienced investment counselors. You can also find out more about our mastermind events, and our real estate tours in markets that are popular among single-family rental investors. Please remember to subscribe to the podcast, and leave us a review! Thanks for listening, Kathy Links: 1 - https://www.cnbc.com/2023/03/22/live-updates-fed-rate-march.html 2 - https://www.marketwatch.com/story/fed-hikes-interest-rates-again-pencils-in-only-one-more-increase-ac42c84e?mod=home-page 3 - https://www.axios.com/2023/03/21/small-bank-struggles-could-hit-the-real-estate-market-har https://www.nytimes.com/2023/03/22/business/svb-signature-commercial-real-estate.html 4 - https://www.bisnow.com/national/news/capital-markets/banking-crisis-will-have-profound-effect-on-regional-bank-cre-lending-118190

In this Real Estate News Brief for the week ending March 18th, 2023… the latest reports on inflation, why homebuilders blame the media for skittish homebuyers, and what international buyers think about the U.S. real estate market. 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 the latest economic news from this past week, and what a week it's been. The banking crisis continues to underscore the impact that interest rate hikes can have on the economy. Economists are now predicting that the Fed may only raise rates a quarter point when it meets in the coming week, instead of the previously anticipated half point rate hike. (1) The latest inflation reports are also encouraging. The Consumer Price Index was up .4% in February. That's after a .5% increase in January. The lower rate of inflation brings the annual rate down to 6% from 6.4%, which is still high, but receding. The CPI's core rate was a bit higher. It was up .5% on a monthly basis with an annual rate that is now at 5.5%. The core rate doesn't include prices for food or gas. (2) The Producer Price Index was also down an unexpected .1% in February. Economists had expected a .3% gain. The decrease brought the annual rate down to 4.6% which is substantially below the January reading of 5.7%. Most of the decline was due to a steep drop in egg prices. They came down more than 36%. The Fed will be paying attention to both those reports at the upcoming meeting, along with the risk to banks that rate hikes are causing. (3) The job market continues to show strength. Jobless claims tumbled to 192,000 last week. That's down from 212,000 the week before. The report suggests that companies are not laying off many workers, despite the tough economy. (4) The government also reported good news about home construction. Housing starts were up almost 10% in February. Economists had estimated a seasonally adjusted annual rate of 1.31 million, but the report shows 1.45 million. It's the first time in six months that new home construction is higher. Building permit applications also surged higher by almost 14% indicating more new homes are in the pipeline. They are now up to 1.52 million, while economists had forecast 1.34 million. (5) Builders are also showing more confidence. The National Association of Home Builders reports that its home-builder confidence index is up for a third month in a row. The reading is now up to 44 which is still below the midway point of 50. It was at 79 last year at this time. The NAHB says that home buyers are still wrestling with high prices and a tight inventory while builders are dealing with tight credit and a dwindling number of buildable lots. (6) Mortgage Rates After several weeks of slowly rising mortgage rates, they reversed course after the bank failures. That's due to investors shifting money to safer assets such as Treasury notes and bonds. When that happens, Treasury yields fall along with mortgage rates which tend to follow those yields. Freddie Mac says the average 30-year fixed-rate mortgage was down 13 basis points to 6.6%. The 15-year was down 5 points to 5.9%. (7) In other news making headlines… Homebuilders Blame the Media for Buyer Fears Homebuilders are blaming the media for headlines that are scaring off home buyers. The NAHB says that almost 80% of home builders believe this. Last year, it was only 55%. The issue is that most reports about the real estate market provide information on the entire U.S. But the nation is made up of hundreds of smaller real estate markets, and while some are seeing a pullback, others are doing quite well. Also, many buyers may not understand that a recent dip in home sales is part of a return to normal after a pandemic-related home-buying frenzy while interest rates were still super low. Last November, a Lending Tree survey showed that 41% of consumers believed we're headed for a housing market crash within the next year. While many consumers are worried about a repeat of the 2008 housing market crash, economists have offered many reasons why that won't happen in today's environment. Chief economist for Nest Seekers International, Erin Sykes, says: "We're now in a more balanced, health housing market." And that's the headline she'd like home buyers to pay attention to. Foreign Buyers Rank U.S. Housing Market as "Excellent" International buyers have a much healthier opinion about the U.S. housing market than domestic buyers. According to a survey by Global Luxury Coldwell Banker Real Estate, 80% of the participants call U.S. real estate a "safe investment." The majority also rank U.S. real estate as either excellent or good. Contrast that with the Fannie Mae Home Purchase Sentiment Index which shows 79% of consumers saying it's a bad time to buy a home. Liz Gehringer of Coldwell Banker Affiliate Business says for the international buyer, the dream of homeownership is alive and well

Just out, the Consumer Price Index for February and it shows that inflation cooled slightly for the month. Government figures show it rose .4% which brings the annual inflation rate down to 6%. It was 6.4% last month. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The report on the CPI also shows a .5% rise in the core rate of inflation, which omits volatile pricing for food and energy. That's slightly higher than a .4% estimate for the core rate, but the annual core rate of 5.5% was inline with expectations. Economists Expect Soften Fed Policy Overall, inflation went down in February, but likely not enough to prevent another rate hike when the Federal Reserve meets next week. Economists expect the banking turmoil to soften the Fed's stance however. The head of Evercore ISI's global policy and central bank strategy, Krishna Guha, told CNBC: "While only moderately higher than consensus, in the pre-SVB crisis world this may well have pushed the Fed to hike 50 basis points at its March meeting next week. It is a sign of how much things have changed in the very near term that 50 basis points is almost certainly off the table for March." Economists started predicting a 50 basis point rate hike after hawkish comments by Fed Chief Jerome Powell when he testified before two congressional committees. During two days of testimony, Powell said that interest rates will probably be "higher than previously anticipated." After the failure of Silicon Valley Bank and two other banks, economists now expect the Fed to back off a bit, but not completely. Jeffrey Roach, who's the chief U.S. economist at LPL Financial told CNBC: "Even amid current banking scares, the Fed will still prioritize price stability over growth and likely hike rates by .25% at the upcoming meeting. Inflation Rate Varies from Sector to Sector When you break the report down into sectors, you see that lower energy prices helped bring the overall rate down. Energy prices were down .6% in February, to an annual rate of 5.2%. Food prices were up .4% although egg prices tumbled. They were down 6.7% but are still up 55.4% on a year-over-year basis. Shelter costs were .8% higher which brought the annual rise in shelter prices to 8.1%. Shelter costs make up about one third of the CPI, but fed officials expect those costs, including rent growth, to slow down throughout the year. As Bright MLS chief economist, Lisa Sturtevant, told CNBC: "Housing costs are a key driver of the inflation figures, but they are also a lagging indicator. It typically takes six months for new rent data to be reflected in the CPI." She says the fact that the data is six months old means that inflation levels are not accurately reflecting current rates of inflation. Moody's: Six Banks at Higher Risk of Failure Fed officials will be taking this report into consideration at their meeting, along with other newly released economic data and the risk to the banking system. Moody's released a list of six banks that it considered at higher risk of failure because of the current economic environment. Those banks include: First Republic Bank, Zions, Western Alliance, Comerica, UMB Financial and Intrust Financial. (2) Economist Gus Faucher of PNC Financial Services told MarketWatch: "What was a tricky task for the Fed, raising rates by enough to cool off inflation, but not by too much as to push the economy into recession, has gotten even more difficult with the recent bank failures." (3) Check the show notes at newsforinvestors.com for links to our sources. I also encourage you to join RealWealth for free. When you become a member, you have access to more than just the Learning Center. You'll be able to log in to the Investor Portal where you'll find data on some of the best rental markets in the country, along with sample properties for sale to investors. Members also have access to our experienced investment counselors, and our list of property teams and other real estate professionals that can help put you on the path to financial freedom. Thanks for listening, Kathy Fettke Links: 1 - https://www.cnbc.com/2023/03/14/cpi-inflation-february-2023-.html 2 - https://www.cnn.com/2023/03/14/investing/moodys-us-banks-downgrade/ 3 - https://www.marketwatch.com/story/cpi-shows-slightly-cooler-u-s-inflation-but-pressure-still-on-fed-to-raise-rates-fe88e2f5

In this Real Estate News Brief for the week ending March 11th, 2023 and beyond… the collapse of three banks in one week, how this might change the Fed's decision on a rate hike, and a new attempt to kill the 1031 exchange. 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 the latest economic reports and the failure of a huge bank in Silicon Valley. The collapse of Silicon Valley Bank happened in just 48 hours, after a $42 billion bank run. It's now the second biggest bank collapse in U.S. history after the collapse of Washington Mutual in 2008. The crisis began when the bank said it needed to raise $2.25 billion to shore up its balance sheet, but that spooked investors which include some of the biggest tech companies and venture capitalists in Silicon Valley. Withdrawals happened so rapidly that the company was forced to sell all of its available-for-sale bonds at a $1.8 billion loss. At the end of the two-day run, the bank had a negative cash balance of $958 million. (1) Fintech investor Ryan Falvey of Restive Ventures told CNBC: "This was a hysteria-induced bank run caused by venture capitalists. This is going to go down as one of the ultimate cases of an industry cutting its nose off to spite its face." The root cause of the collapse goes deeper however, into the lap of the Federal Reserve and its fight against inflation. As the Fed hiked rates, many of the startups withdrew funds to keep their businesses afloat. That led to a funding shortfall at the bank, and the need to sell those bonds at a loss. The government is trying to prevent further damage to the economy by taking control of SVB and promising to make good on all deposits including deposits worth more than the FDIC-insured $250,000 maximum. The Treasury Department, Federal Reserve, and FDIC said in a joint statement: "This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth." (2) Regulators are also dealing with two other bank failures. They have taken control of crypto-friendly Signature, which has a sizable commercial real estate loan portfolio. They are also promising that customers will have full access to their deposits, beyond the $250,000 FDIC insured amount. (3) It's a different story for crypto-friendly Silvergate which has also failed. That bank started to go downhill after the collapse of crypto exchange FTX last year. At this point, the bank has now announced that is will shut down and liquidate assets to meet its obligations with depositors. (4) Economists say the banking failures point to what some now expect to be a "hard landing" for the economy, or at least harder than the wished-for "soft landing." While they were recently forecasting as much as a half point rate hike at the Fed's next meeting, there's now talk that the Fed will have to back off. CNBC reports that the probability of a quarter point rate hike rose above 70% at one point last Friday. But the Fed will also be considering new economic data including a report on February's Consumer Price Index. (5) Moving on to the job market. Initial claims for unemployment jumped to 211,000 last week. That's the highest since Christmas, but most of those lay-offs were in New York, so they may not indicate a national increase. Meanwhile, continuing claims were up 69,000 to a total of 1.72 million. (6) As for job growth, the government says that companies created a robust 311,000 new jobs in February. That's less than the 500,000 jobs created in January, but more than Wall Street analysts had forecasted. The unemployment rate did rise slightly to 3.6% and job openings have come down somewhat, to 10.8 million. In December, there were 11.2 million open positions and a record 12 million earlier in 2022. (7) (8) Mortgage Rates Checking in on mortgage rates… Freddie Mac says the average 30-year fixed-rate mortgage was up 8 basis points this last week, to 6.73%. The 15-year was up 6 points to 5.95%. (9) In other news making headlines… Another Whack at the 1031 Exchange President Biden is taking another whack at the 1031 exchange. His budget proposal suggests that by eliminating 1031s, the government would collect an additional $19 billion. The 1031 gives real estate investors a way to transfer equity from one investment property to another similar property without triggering a taxable event. But it would only defer the tax obligation, not eliminate it. (10) The White House is calling it a "sweetheart deal" for real estate investors, but it's also a shot in the arm for the economy, when investors can reinvest without taking an immediate tax hit. Let's say you own a property that has increased in value, and you'd like to sell that property so you can buy a similar property elsewhere. If you have a huge tax bill,

The Fed may have a difficult time determining its progress against inflation later this year, as the two biggest inflation indicators contradict each other. The Federal Reserve prefers the Personal Consumption Expenditures index or PCE as a basis for its 2% inflation target. But due to the differences between the PCE and the Consumer Price Index or CPI, they might reverse their roles and cause confusion. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please don't forget to subscribe to our podcast, and leave us a five-star review if you like what you hear! The CPI is more closely watched by average Americans, and it's been the one to show the highest level of inflation. But according to an analysis in the Wall Street Journal, as inflation subsides, it could drop below the PCE, making it difficult for the Fed to explain rate hikes based on the PCE. (1) Difference Between the CPI and the PCE Indexes Economists are betting that the CPI will fall to 2.6% in October while the PCE will drop to about 2.8%. Barclays inflation expert, Michael Pond, says: "That will leave market participants looking at low inflation while the Fed looks at a measure that tells them they need to continue to be quite hawkish." The two indexes perform differently because they place different amounts of emphasis on various components of the economy. For example, housing makes up 33% of the CPI which is more than twice the size of the housing component in the PCE. Shelter inflation is rising about 8% per year right now in both indexes, so the strength in housing in pushing the CPI higher. As the Journal reports, it contributed 2.5 percentage points to the CPI's January reading of 6.4% while it only contributed 1.2 percentage points to the PCE's January report. Piper Sandler economist Jake Oubina expected CPI shelter inflation to fall from 8.1% in March to 5.5% in December. If that happens it will weigh more heavily on the CPI, bringing the total amount of inflation down by a larger percentage than the PCE. Economists also believe that medical care costs will play a role in this disconnect between the CPI and PCE. Those costs are expected to rise this year. They make up 16% of the PCE and just under 7% of the CPI. If they do go higher, that will put more pressure on the PCE than it does on the CPI. There's also concern that energy costs will help invert these two indicators because they make up 6.9% of the CPI and just 4% of the PCE. If energy costs keep falling, that will exert more deflationary pressure on the CPI. CPI Could Drop Lower than the PCE City economist Veronica Clark told the Journal that a combination of the factors could bring the CPI down to 3.2% by June while the PCE is closer to 3.6%. She expects the gap to be even bigger for core inflation. She says: "For the Fed, the message could be kind of tricky. They target PCE, technically, so as long as the PCE remains high, they can't declare victory." You'll find a link to the Wall Street Journal article in the show notes at newsforinvestors.com. We also invite you to become a RealWealth member. It's free and will give you full access to all our real estate data and resources, including property tours in several markets over the next few months. You'll find information on those tours inside the Realty Portal on our website. I would also like to remind everyone to please subscribe to the podcast if you haven't done so already and leave a review! Thanks for listening, Kathy Fettke Links: 1 - https://www.wsj.com/articles/fed-might-be-winning-inflation-fight-depending-on-index-used-56d3e31b?mod=pls_whats_news_us_business_f

In this Real Estate News Brief for the week ending March 4th, 2023... the Fed Chief's testimony before Congress for the current week along with a forecast on home prices and what national rent growth is doing for single family homes and multi-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. Economic News We begin with comments from Fed Chief Jerome Powell about the central bank's fight against inflation. He spoke before the Senate Banking Committee and the House Financial Services Committee on March 7th and 8th. Bloomberg reports that he softened his tone slightly on the second day, saying that Fed officials will wait for new data on Jobs and inflation before they decide on the size of a rate hike when they meet later this month. He did say the rates will likely go higher than previously anticipated, but that depends on the new data and whether it indicates that the economy is still running hot. (1) Recent economic data shows strong job growth and inflation that seems to be ticking higher, instead of lower. But the Fed will be getting February reports on jobs, inflation, and retail sales before the Fed's next meeting on March 21st and 22nd. Those reports will have a strong influence on the central bank's next move. Short-term rates are currently running between 4.5% and 4.75%. The Fed has penciled in a target range of 5% to 5.25%. The weekly jobless report shows that initial unemployment claims were down again, for the seventh week in a row. They've been holding steady below 200,000, which is near a historic low. Last week, there were 192,000 new claims. Continuing claims also dropped. They were down 5,000 to 1.66 million. (2) Pending home sales bumped higher in January. The National Association of Realtors says that contract signings for existing homes rose 8.1%. That's a big bump, and the highest since June of 2020. That follows a pull-back in home sales as mortgage rates pushed higher, and then came back down slightly. Unfortunately, they have been rising again so we may see a new lull in home sales. NAR expects an 11.1% drop in existing-home sales for 2023. (3) Construction spending was down slightly in January. The government says it dropped .1%. Spending is up overall, at 5.7% for the past year. As for single-family construction, it was down 1.7% in January. (4) Mortgage Rates Mortgage rates continue to move higher, as I mentioned. Freddie Mac says the average 30-year fixed-rate mortgage was up 15 basis points this last week, to 6.65%. The 15-year was up 13 points to 5.89%. (5) The Mortgage News Daily has the average pegged at 7.1% for the 30-year. The Daily's COO, Matthew Graham says: "Rates continue to move at the suggestion of economic data, and the data hasn't been friendly. This is scary considering this week's data is insignificant compared to several upcoming reports." (6) In other news making headlines… Lower Home Prices in the Coming Months? As mortgage rates hover in the 7% range, home prices will likely head lower in the coming months. According to Redfin, the typical U.S. home sold for just over $350,000 in February. That's down .6% from the previous year, and the first time prices have fallen since February 2012. But that's not making homes more affordable. The typical mortgage payment has hit a record high of $2,520. (7) Redfin's Deputy Chief Economist Taylor Marr says: "Mortgage rates rising to the 7% range was the straw that broke the camel's back, dampening home buying demand and leading to sellers asking less for their homes." He expects prices to come down a bit more in the months ahead, but he says: "First-time buyers hoping to score a major deal this year are likely out of luck… because so few homeowners are listing their homes for sale." When it comes to affordability, Redfin says that just 1 in 5 home listings were affordable last year. That's down from 2 in 5 in 2021. (8) National Rent Growth Rebound Multi-family rent growth did a u-turn in February, with the first positive number in several months. Apartmentlist.com reports that after months of decline, it was up by .3% in February to a year-over-year increase of 3%. The research team says it's following a seasonal trend and shows that rental demand is rebounding. (9) Single-family rent growth dropped by about 50% in December, but the latest report from CoreLogic shows that that annual rate is 6.4%. The report says that the average rent for a detached rental home had gone up about $300 a month over the past two years. And that markets in Florida, including Orlando and Miami have posted the highest gains. (10) 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. If you're interested in learning more about real estate investing, please click on the Learn tab. When you become a member, you'll have full access t

Home values have been coming down since they peaked in June of last year. A Redfin report shows the U.S. total went as high as $47.7 trillion before it dropped to $45.3 trillion in December. That's a 4.9% decline and the largest June-to-December percentage drop since 2008. The report also shows that home values in some markets are holding up well, with double-digit year-over-year gains. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please don't forget to subscribe to our podcast, and leave us a five-star review if you like what you hear! According to Redfin, December year-over-year home values were still 6.5% higher nationally, but that's the smallest year-over-year increase since August of 2020. The analysis included data on 99 million U.S. residential properties in the top 100 metros for population. (1) Fight Against Inflation Impacting Home Values Property values started declining after what seemed like an unstoppable run-up in home values. Inflation really took off after all the government stimulus during the pandemic, and now the Fed is trying to slow things down with rate hikes. Although the higher short-term rates are not directly connected to mortgage rates, they do have an impact. And when mortgage rates rise, home prices fall. The median U.S. home price hit a peak of $433,133 in May, and then dropped 11.5% to $383,249 in January. While that was happening, the average 30-year fixed-rate mortgage hit 7.08% last November and has come down closer to the 6% level since then, but it's still more than two times what it was for years before that. On the bright side, people who bought homes before or during the pandemic are still seeing gains. Redfin's Chen Zhao says: "The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirusvwas declared a pandemic." Florida Home Value Holding Up Well But one of the more interesting results of this analysis – it shows that home values in Florida and other Southeast metros are not only holding up well, but rising in many areas. Redfin says the total value of homes in Miami were up 19.7% year-over-year in December. That's a huge annual increase. North Port-Sarasota was second on the list of rising Florida home values with a 17.8% year-over-year increase. Knoxville, Tennessee, was next with a 17.7% increase. Charleston, South Carolina, follows with a 17.4% increase. And then we're back to Florida, where Lakeland was up 16.9%. When you look at the top ten metros for home value appreciation, six of them were in Florida, including Fort Lauderdale, Orlando, Jacksonville, and Tampa. Palm Beach Redfin agent, Elena Fleck, says: "Florida's housing market is being sustained by folks moving in from the North and as of recently, the West Coast." She says that "people are pouring in from New Jersey and New York" thanks to Florida's affordability and the fact that Florida has no income tax. Suburbs Are Doing Better than the Cities The report also shows that home values are doing better in the suburbs than they are in the cities. That's the result of the remote worker exodus that continues although many companies are demanding that employees spend at least some time in the office. The housing market that lost the highest percentage value in this recent decline is the San Francisco Bay Area. You might also expect to see declines In markets where there's a high risk of flooding or heat, but they've done better than other areas. Redfin says that suggests that climate dangers are not yet priced into home values. You'll find a link to the Redfin report in the show notes for this episode at newsforinvestors.com. You can also join RealWealth at our website. It's free and easy to join for access to all our data on strong rental property markets. If you'd like to see some of these properties in person, please check out our tour page. We have several tours lined up over the next few months. As always, I ask everyone to please subscribe to our podcast, and follow me on instagram @kathyfettke. Thanks for listening! I'm Kathy Fettke. Links: 1 - https://www.redfin.com/news/housing-market-loses-value-2023/

I n this Real Estate News Brief for the week ending February 25th, 2023... the latest disappointing report on inflation, a Q4 report on investor home-buying activity, and a new prediction for institutional ownership 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 and a report that inflation remains stubbornly high. According to the Personal Consumption Expenditures index or PCE, the cost of goods and services rose .6% in January. That's the largest increase since last summer, and raises the annual rate from 5.3% to 5.4%. The core rate, which excludes food and fuel, was also up .6% and raises the annual core rate of inflation from 4.6% to 4.7%. The disappointing results follow two other hot inflation reports for January. It's not clear if this is just a blip in the battle against inflation or a change of course, but it does suggest that the Federal Reserve may keep its foot on the rate hike gas pedal. (1) The next meeting of the Federal Reserve Board is March 21st and 22nd, so a lot can happen between now and then. Fed officials raised the rate a quarter point during their February meeting to a range of 4.5 to 4.75%. The minutes show there's unanimous support for continued rate hikes although some Fed officials believe the economic risks have become more balanced and not just focused on inflation. A few members suggested the need for a half point rate hike to speed up the Fed's inflation-reducing strategy but it wasn't written into the minutes as an effort supported by all members. (2) (3) Several of the regional Fed Presidents also spoke out last week, including Cleveland Federal Reserve President Loretta Mester. She said last Friday that interest rates may need to move higher to curb inflation but she's still optimistic that it can be done without triggering a recession. (4) And it's "so far so good" for the job market. U.S. jobless claims were lower last week by about 3,000 to a total of 192,000. That's below the forecast and a sign of strength for the job market. (5) On to the housing market… New home sales were up 7.2% in January thanks to strong sales in the South. They were up 17.1% in the Southern region and down everywhere else. The Northeast had the biggest drop of 19.4%. U.S. year-over-year sales are still down 19.4%. (6) Existing home sales were also higher in the South and the West, but they were down overall by .7%. As reported by MarketWatch, the amount of sales activity was the lowest since October of 2010. Year-over-year, they were down 36.9%. (7) Mortgage Rates Mortgage rates floated higher last week. Freddie Mac says the average 30-year fixed rate mortgage was up 18 basis points to 6.5%. The 15-year was up 25 points to 5.76%. Freddie also said that as average rates rise, there may be a big difference in rates from lender to lender so it's best to shop around. (8) In other news making headlines… Real Estate Investor Activity Down Almost 50% in Q4 It isn't just retail home buyers who are sitting on the housing market sidelines. Many investors are too. A new Redfin report shows that investor home purchases were down 46% year-over-year in the fourth quarter, but the share of homes bought by investors is about the same. It slid from 19% to 18% for the year. (9) Redfin says that investors had piled into the market in 2021 because of low mortgage rates and high demand for housing. But many are now waiting for rates and prices to come down. Florida agent Elena Fleck says: "A lot of investors are on hold because they still see home prices declining." She says: "The investors who are in the market are selective and aggressive. Many of them are only offering around 60% of the asking price since it's so difficult to make a profit when flipping homes right now." Investor activity varies from market to market. The report says investors activity is down the most in pandemic boomtowns like Phoenix and Las Vegas. But there are many markets where the investor share of purchased homes is higher, including Miami, Jacksonville, Atlanta, and Charlotte. Will Institutional Investors Own 40% of Single-Family Rentals by 2030? The institutional ownership of single-family rentals could mushroom over the next several years. According to an analysis by MetLife Investment Management, their share was about 5% early last year, and by 2030, it could be more than 40%. That's about 7.6 million homes controlled by rental portfolio giants like Tricon Residential, Progress Residential, American Homes 4 Rent, and Invitation Homes. (10) Representative Ro Khanna from California authored the "Stop Wall Street Landlords Act of 2022." If it passes, it would provide disincentives for institutional investors such as an excise tax on the sale or transfer of a single-family home that's equal to the price of the home. It would also eliminate deductions for mortgage intere

In this Real Estate News Brief for the week ending February 18th, 2023... a double dose of inflation data, why investors might save the day for the housing market, and what remote workers are worried about this winter. 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 government released "two" inflation reports, that show we're not making as much progress as we'd like in taming those high prices. The Consumer Price Index or CPI shows that the cost of living was up .5% in January, with a slight drop in the annual rate from 6.5% to 6.4%. The core rate, which omits food and gas, was also higher than expected at .4% for January and an annual rate of 5.6%. Most of the increase was due to higher housing costs and gas prices, and was higher than Wall Street economists expected. Rents were up .7% in January while the yearly cost for shelter jumped to a new peak of 7.9%. Housing is the single largest CPI category, but it's also a lagging indicator by about six months. (1) The latest Producer Price Index or PPI was also released and shows a .7% jump for January. Economists had expected about half that much. The annual rate is down from 6.5% to 6% however, but both reports show that inflation is still well above the Federal Reserve's 2% target. (2) Meanwhile the job market is showing stubborn resilience against the Fed's effort to slow the economy. Initial jobless claims were still below 200,000 for a fifth week in a row. Ongoing claims rose slightly to 1.7 million. Both readings are still low, although the continuing claims have been rising gradually since last spring. (3) Housing starts were down again, thanks to builder concern about a lull in buying activity. The Commerce Department says they were down a seasonally adjusted 4.5% in January to 1.31 million. As MarketWatch reports, construction is now at its lowest level since June of 2020 with the annual rate of housing starts off by 27.3%. But, builders are becoming more confident about an increase in sales, with signs that they plan to increase production in the coming months. (4) The National Association of Homebuilders says the home-builder confidence index is now up to 42. It's still below the breakeven point of 50 but it's an 11 point jump from December. (5) Mortgage Rates The rate for a 30-year fixed-rate mortgage didn't move much this past week. Freddie Mac says the average was up two basis points to 6.32%. But the 15-year was up a quarter of a point, to 5.51%. (6) In other news making headlines… Will Investors Prevent a Housing Market Crash? A billionaire real estate fund manager is speculating that investors will prevent a housing market crash. The rapid rise in home prices combined with higher interest rates have sidelined a lot of buyers, and there's speculation that we'll end up seeing a housing market crash. But Grant Cardone told Benzinga that "investors will re-enter the market before it starts teetering toward a crash. He apparently plans to be one of those investors. (7) He said in a statement: "Investors will step in to pick up single-family homes at lower prices with less competition. That being said, there will be no housing crash. Investors, like myself, will save the day and step in to buy the home." Strong Year Expected for Build-to-Rent SFRs A new analysis of Census Bureau data shows the market share of build-to-rent homes is growing, and the trend is expected to continue. The National Association of Home Builders reports a 6% increase in build-to-rent starts during the fourth quarter of last year. That's about 17,000 homes, with a yearly total of about 69,000. Compared to 2021, that's a 33% increase. (8) The numbers only include homes that were specifically built for renting, and not for homes that were sold to another party for rental purposes. Based on industry surveys, the NAHB estimates that the build-to-rent market share is higher by another 5% or more if you include those homes. Remote Work Getting Too Expensive for Some Workers While many remote workers love the freedom to work from home or wherever, the winter months have apparently been a wake-up call for some. Remaining at thome means higher heating bills, and with the rising cost of energy, that's turning into a big expense for some people. (9) Internet provider Sky Connect conducted a survey among 1,000 remote workers and found that 87% are worried about their energy bills. Many said they have been forced to find another place to set up shop, like a local cafe. The only downside is that internet service may not be as reliable. The upside is the support of local businesses, and the need for those businesses to provide the kind of working environment that will keep those remote workers happy when they are not working from home. That's it for today. Check the show notes for links. And please remember to join our network of investors at

Population growth, job growth, and infrastructure growth are some of the essential ingredients for a healthy real estate market. They all feed into housing demand, and should be important considerations for determining where to buy rental property. A recent NAR report on population growth puts Florida and Texas at the very top of a national list for population growth in 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. "Where People Moved in 2022" The National Association of Realtors published an article called "Where People Moved in 2022." It is based on data from the Census Bureau data on net migration for each state. Not only did Florida have the highest number of newcomers at 318,855 people, it also had the highest percentage of population growth at 1.9%. Other states with impressive statistics include Texas, which was second on the list for the highest number of new residents. The data shows 230,961 people moved to Texas, but the percentage of new residents was a little lower than Florida at 1.6%. Idaho and South Carolina were higher than Texas when you look at the growth percentage. Those figures were 1.8 and 1.7% respectively. Other states near the top of the list include North Carolina, Tennessee, Georgia, Arizona, Alabama, Oklahoma, and Nevada. The list ranks all 50 states so you can see for yourself where each state stands for in-migration and out-migration. California was at the very bottom of the list with the loss of 343,230 residents. That lowers the population by -.3%. New York wasn't much better with the loss of almost 300,000 people and a population decline of -.9%. Why Investors Love Florida & Texas Getting back to places like Florida and Texas, they are both in the Sun Belt region which attracts a lot of people. They are still more affordable than many markets around the country, and both have experienced a robust job recovery after the pandemic. At RealWealth, we've been strong advocates of both the Florida and Texas markets, for cash flow and growth. To help investors get to know the areas, we have set up property tours through out the next few months. Starting with Dallas on February 25th and 26th, Orlando on March 4th, Southwest Florida on March 18th, Tampa on March 25th, Charlotte, North Carolina on April 1st, Indianapolis on April 15th, Jacksonville, and Florida on April 22nd. I will personally be attending the Tampa tour on March 25th, so I hope to see you there! You can see the list and get all the details at realwealth.com/tours/. You need to be a RealWealth member to sign up for the tours, but it's free to join at newsforinvestors.com. As always, I ask everyone to please subscribe to our podcast, and follow me on instagram @kathyfettke. Thanks for listening! I'm Kathy Fettke. Links: 1 - https://www.nar.realtor/blogs/economists-outlook/where-people-moved-in-2022

A debate over the definition of an accredited investor is underway ahead of an SEC meeting that could make it tougher to quality. The SEC Chairman is reportedly in favor of making the definition more restrictive, and that's raising concerns among lawmakers, financial scholars and business startups who feel that opportunities for investing should be expanded, not diminished. (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. What is an Accredited Investor? If you've been wanting to invest in a private placement, such as an apartment or storage syndication, but haven't yet met the requirements of an accredited investor, you may be feeling the frustration. The SEC requires an individual to earn at least $200,000 a year as an individual, $300,000 a year as a couple, or a networth of $1,000,000 or more which excludes the value of a primary residence. Accredited vs. Sophisticated The SEC does allow a small number of non-accredited investors in certain private placements - 35 to be exact. And though they may not be accredited, they do have to be "sophisticated." Investopedia defines a sophisticated investor as someone "with sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment." (2)(3) That knowledge or experience would need to be obvious to the private placement sponsor or syndicator. That could include an employee with knowledge about investing opportunities, risks, and the deal itself. The sophisticated investor designation is allowed in a 506(b) offering under Regulation D - but again only 35 "sophisticated" investors are allowed, and they must have a pre-existing relationship with the sponsor. The Jumpstart Our Business Startups Act, or JOBS Act, of 2012 allowed investors with no prior existing relationship to participate in a private placements for the first time through a new category called 506(c). This allows syndicators and fund managers to market their offerings to the public, but does not allow non-accredited sophisticated investors. Only accredited investors are allowed in a private placement that advertises publicly. Support for Less Restrictive Definition At a House hearing on what the SEC is currently planning to do, Committee Chairwoman Rep. Ann Wagner said: "It is no secret that SEC Chairman Gary Gensler's agenda includes sweeping new regulations in our private markets that would create barriers for investors and entrepreneurs to participate in those markets." An article in The DI Wire says notes on the SEC's agenda show that Gensler plans to change "the accredited investor definition by increasing the annual income and net worth thresholds." The SEC began soliciting public comments on potential changes last year to "update the rules" and "more effectively promote investor protection." (4) Representative Brad Sherman that the current definition doesn't make sense and needs reform. He says: "That doesn't mean it should be more restrictive or less restrictive than what we have now, but it should be different." Is the Current Accredited Investor Definition Unfair? Director of Financial Regulation Studies at the Cato Institute, Jennifer Schulp, was more critical. She testified that the accredited investor definition is "unfair" and objected to the idea that the SEC decides "who gets to invest where: public markets for most, but public and private markets for those it judges to be worthy." She says: "Such paternalism – limiting how people can invest their money – is objectionable in itself. The SEC should not be charged with protecting individuals from their choices to take certain kinds of financial risk." She highlighted the fact that in 2010, the SEC "shrank" the pool of accredited investors by adding a clause to the Dodd-Frank Act that excludes the value of a person's primary home. Proposed Certification Exam Chairman of the House Financial Services Committee, Rep. Patrick McHenry, had introduced the Equal Opportunity for All Investors Act. It calls for the SEC to offer an accredited investor certification exam for people with investment knowledge and experience. He said during the hearing that he looks forward to moving ahead with legislative proposals that would improve the accredited investor definition. (5) Meantime, the SEC rulemaking session is scheduled for April. You can read more about the evolution of this issue by following links in the show notes at newsforinvestors.com. If you'd like to learn more about the private placement deals that we offer at RealWealth, please go to GrowDevelopments.com. We are currently offering a North Dallas Rental Fund for people who want to leave the landlording and property management to someone else, but would like the financial benefits of owning rental property. However, this deal is only available to accredited investors who fit the current definition. Please hit the joi

In this Real Estate News Brief for the week ending February 11th, 2023... What's ahead for single-family rentals and build-to-rent homes, along with a look at why Los Angeles landlords may be fuming right now, over a new law. 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 comments from Fed Chief Jerome Powell, about last week's surprisingly strong January jobs report. He said of the report: "It was certainly stronger than anyone I know expected." (1) The blowout report surpassed expectations with 517,000 new jobs, and a decrease in the unemployment rate to 3.4%. (2) With 5 million more jobs than there are workers to fill them, Powell is concerned that competition for workers will lead to continued inflationary wage growth. He says the "disinflationary" process has begun, and expects to see significant declines in inflation this year, but expects it will take more rate hikes, and all of next year to get inflation back to the 2% level, especially with such a strong job market. Powell says: "If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more." On the positive side of the jobs report are comments from Federal Reserve Governor Lisa Cook who believes the Fed's rate hikes "can be accomplished without a large increase in unemployment." And that raises hope for a "soft landing." (3) There's still talk that the federal funds rate will peak at 5% to 5.25%. We are currently in the 4.5% to 4.75% range. New York Fed Chief John Williams is among those who see 5% as a peak short-term rate, although he reiterated during an interview with the Wall Street Journal that there is still much work to be done. As for the weekly jobless report, initial claims were 13,000 higher than the week before, but they are still near pandemic lows. The total was 196,000. Continuing claims were up 38,000 to a total of 1.69 million. There has been a gradual increase in those continuing claims which may indicate that it's taking longer for people to find new jobs. (4) Mortgage Rates Mortgage rates ticked up slightly. Freddie Mac says the average 30-year fixed-rate mortgage was 3 basis points higher at 6.12%. The 15-year was 11 points higher at 5.25%. (5) In other news making headlines… Single-Family Rentals Forecast A new analysis by Green Street says that single-family rentals will be "well-positioned" for the next five years. GlobeSt.com reported on the analysis by John Pawlowski who says that single-family rentals will benefit from strong demographics, affordable price points, and limited single-family construction. Pawlowski also expects SFR communities to benefit from the 35 to 44-year old age group which is expected to grow at double the rate of other age groups. He says that many of these communities are in the Southeast, either existing, planned, or under construction. (6) The Green Street report also describes this asset class as "resilient" with a "firm floor" for rents and values. The fact that renting has become more affordable than owning contributes to this outlook. But he does warn about headwinds. He says expects higher operating costs to continue without much relief in sight. That includes costs for repairs, maintenance, and property taxes. There are also political risks ahead for this asset class, due to potential regulation that mainly targets institutional investors. Strong Year for Build-to-Rent New build-to-rent homes are also expected to do well this year. Brad Hunter of Hunter Housing Economics told GlobeSt.com that he expects to see another "up" year with somewhat slower leasing activity. But he sees this as a temporary lull with flat rent growth for the next few quarters. He says: "By this Fall, we'll see rent growth come back again, and probably fairly strongly." He's predicting rent growth of 5 to 6% by 2025 or even sometime next year. (7) A limited supply of new single-family homes will push demand higher for renters, especially among Millennials with growing families. He says the spotlight is on the Southeast with "continued strong demand and solid performance in BTR, even during 2023, but at an even greater level from 2024 to 2028." And he says that "Florida is going to be one of the strongest markets… but Georgia and the Carolinas will also see a lot of strong performance." LA Landlords Hit with New Renter Protection Law Los Angeles is adding another financial burden to the business of being a landlord. The city council approved a new law that would force landlords to pay relocation costs, if they hike rents more than 10%. Relocation costs would be three times the fair market rent, plus another $1,400 in moving expenses. (8) This is just the final part of a tenant protections package that the council put together after Covid emergency measures expired. The ne

Tension between the U.S. and China has spilled into the U.S. real estate market, with specific concern about the ownership of American farmland. There's new legislation by two House members that would prohibit the purchase of farmland by Chinese citizens. There's also an increasing number of states that are approving or considering similar limits or bans, including one that's creating a lot of controversy right now 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. As a headline in Fortune warns: "Forget the Chinese balloon – selling farmland to foreign nationals is the real worry." You've probably been following the balloon incident. It was first spotted by a cattle rancher in Washington state, although defense officials said the next day that they were tracking what they suspected was a Chinese spy balloon. (1) Chinese Surveillance Balloon Shot Down U.S. officials allowed it to float all the way across the U.S. before it was shot down with a missile off the coast of South Carolina. They reportedly felt it wasn't a threat as it made its way over the American heartland, but they also wanted to prevent injuries as the mammoth balloon and its equipment fell to earth. Officials say the balloon created a huge debris field from what they are estimating was a 200 foot tall balloon carrying surveillance equipment. One article by CBS News described the equipment as the size of two or three school buses. The article cites intelligence officials who believe the balloon was operated by the People's Liberation Army which is the main military arm of the Chinese Communist Party. (2) China initially claimed the balloon was being used to monitor the weather and accused the U.S. of overreacting to its presence. Bill to Ban China-Owned Farmland Legislation that would ban the purchase of farmland by individuals or entities linked to the Chinese government was introduced shortly after this incident. It's called: "Prohibition of Agricultural Land for the People's Republic of China Act," introduced by Congresswoman Cathy McMorris and Congressman Dan Newhouse, both Republicans from Washington state. McMorris said on her website: "Agriculture is Eastern Washington's number one industry. We simply cannot allow companies from China to lock down our resources and undermine our farmers and ranchers' ability to feed the world." She says: "Prohibiting the Chinese Communist Party from purchasing farmland in the United States is a no-brainer." (3) McMorris says that six states have already enacted laws prohibiting the foreign ownership of farmland, including Hawaii, Iowa, Minnesota, Mississippi, North Dakota, and Oklahoma. The New York Times reports that 11 states are considering legislation restricting the ownership of farmland or real estate in general by foreign entities. That information comes from the National Conference of State Legislatures. (4) Texas Proposal to Ban China-Owned Real Estate Texas is one of the states wrestling with that issue right now. The proposed legislation would expand on a bill passed a few years ago called the Lone Star Infrastructure Protection Act. That bill was a response to the purchase of 140,000 acres by a Chinese billionaire to build a wind farm close to a U.S. Air Force Base. There was concern that the turbines could be used to spy on U.S. military operations, or that the generation of electricity of the wind farm could be withheld and then used for ransom at some point. (5) Now, with the balloon issue making headlines, a Texas state senator is proposing an expanded version of that law that would ban the purchase of land, homes or any kind of real estate by any Chinese company or individual. The issue is generating controversy because the legislation also targets people who are simply Chinese immigrants. Texas Governor Greg Abbott reportedly plans to sign the bill if it passes. It would "not" impact any Chinese immigrants who already own property. There have been protests by people who say the bill is discriminatory. The American Civil Liberties Union and legal scholars are tracking it, and many don't believe it will hold up, legally. One University of Texas law professor says the bill would "raise a host of constitutional issues." Protecting the Future of U.S. Farmland As for how much farmland is already owned by Chinese entities, government data shows that ownership has been growing slowly over recent years. At the end of 2020, Chinese owners controlled about 350,000 acres of farmland, which isn't a huge amount. It's only about 1% of the 3% of farmland owned by all foreign entities and individuals. (6) The big concern is how to safeguard our farmland for the future. If the House bill becomes law, it would prohibit "the purchase of public or private agricultural real estate located in the United States by nationals of the People's Republic of China." (7) You can read more about this issue by following links in t

In this Real Estate News Brief for the week ending February 4th, 2023... another Fed rate hike with an encouraging forecast for the coming months, what Elon Musk is doing with Lennar in Texas, and why real estate agents are embracing an artificial intelligence chatbot called ChatGPT. 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 the past week. The Federal Reserve's Open Market Committee hiked short-term rates by another quarter point, as expected. That raises the Federal Funds rate to a range of 4.5 to 4.75%. It's the highest it's been since October of 2007, and will likely go higher before the Federal Reserve is convinced that inflation is subsiding. During a news conference, Fed Chief Jerome Powell said: "While recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path." (1) Economists are generally seeing at least one or two more quarter point hikes with the possibility of rate cuts after that. The weekly CNBC Fed Survey shows that 82% of participating economists are forecasting another quarter point hike in March as "baked in" with the possibility of a policy reversal after that, and rate cuts later this year. Only 51% are expecting a recession. That's down from 60% in recent surveys, but normal projections for a recession are more like 20%. (2) Jobless claims dipped again, despite recent layoff announcements. The government says there were 186,000 weekly unemployment applications which is down from 195,000 for the previous week. Ongoing claims were also down about 11,000 to a total of 1.66 million. According to MarketWatch, there has been a gradual increase of continuing claims since last spring which suggests that it's taking longer for people to find new jobs, but the job market remains tight. (3) The latest report on job creation shows that companies added 517,000 new jobs to the market in January while the unemployment rate went from 3.5% to 3.4%. That's the lowest it's been since 1969, and reflects the strength of the job market. Economist Sal Guatieri from BMO Capital Markets says of the report: "It raises serious doubts about the economy slipping into recession and the Fed ending its tightening cycle this spring." (4) Home price growth has slowed for a fifth month in a row. The S&P CoreLogic Case-Schiller national index shows that it fell a seasonally adjusted .6% in November to an annual rate of 9.2%. The 20-city index was down .5% to an annual rate of 8.6%. Of those 20 cities, Miami, Tampa, and Atlanta topped the list for largest year-over-year gains, although prices are also lower in these cities. The only city with a decline in home price growth was Detroit but only by .1%. (5) The amount of money spent on construction was down in December. The Commerce Department says it fell a seasonally adjusted .4% to $1.81 trillion. Wall Street economists had expected a flat reading. Single-family construction was down 2.3%. (6) Mortgage Rates Mortgage rates dropped a bit closer to the 5% range. Freddie Mac says the average 30-year fixed-rate mortgage was down 4 basis points to 6.09% while the 15-year fell three points, to 5.14%. According to Mortgage News Daily, the average 30-year rate has already dipped below that 6% threshold to 5.99%. The big dip came right after Fed Chief Powell softened his language about inflation after last week's meeting and rate hike. Freddie says the lower rates will make it possible for as many as three million more people to qualify for a loan. (7) (8) In other news making headlines… Elon Musk Partners with Lennar in Texas Elon Musk is expanding his footprint in Texas with a community of about 100 workforce homes. He's teaming up with Lennar to build the homes in the Pflugerville area, north of Austin, where the Boring Company is headquartered. The development is being affectionately called "Project Amazing" with some Musk-inspired street names that include: Boring Bulevard, Cutterhead Xing, Porpoise Place and Waterjet Way. (9) Real Estate Industry Embraces ChatGPT Real estate agents are embracing the artificial intelligence chatbot ChatGPT. Business Insider says realtors are using it for emails, property listings, social media posts, and newsletters. According to Iowa real estate agent JJ Johannes: "It's not perfect but it's a great starting point." He says the chatbot uses all the lingo you'd expect to see in a listing like "open floor plan" and "recently updated." You can also add to the listing after it's written if you think that details were left out. Miami broker Andres Asion offered another example, he was unsuccessful at getting a developer to correct a problem with some windows until he asked ChatGPT to write the email as a legal issue. He says the developer showed up at the owner's home shortly after that email was sent. The artificial intelligence chat

The Biden Administration launched a broad-based effort by federal agencies to "improve the quality of life for renters." The announcement comes at a time when 40% of renters are struggling to keep up with their rent payments, but raises questions about how to make housing affordable in a way that is fair for both renters and landlords. (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. U.S. Rent Growth Rents have been soaring across the country, as housing demand continues to outpace supply, but it has also been slowing down as the Federal Reserve works to slow inflation with rate hikes. According to Zillow, typical U.S. asking rents are $1,981, which represents a yearly growth rate of 7.4%. That's down from a peak of 17.1% last February. (2) Rents and rent growth vary wildly from market to market. In Miami, year-over-year rent growth is 11.7% while Las Vegas is showing a negative .9% increase. A few other examples include Cincinnati with a rent growth rate of 10.2% and Indianapolis, at 9.6%. Federal Renter Protection Effort Getting back to the renter protection announcement, let's look at some of the top calls to action: 1 - The Federal Trade Commission or FTC and the Consumer Financial Protection Bureau (CFPB) will be investigating ways that tenants are being unfairly prevented from getting into housing or removed from housing they already have. Some of the practices they will be investigating include the use of background checks, tenant screening algorithms, adverse action notices for rejecting applicants, and information on an applicant's source of income. 2 - Those two agencies will also issue guidance for the credit reporting process, and coordinate enforcement efforts to ensure the accuracy of the information. They will also hold background check companies accountable if they engage in unfair procedures. 3 - The Federal Housing Finance Agency or FHFA will be involved with renter protections that include limits on excessive rent increases. The agency describes it as a public process that prioritizes transparency with updates, including one within the first six months. The FHFA will also encourage affordability for the multifamily market with affordability requirements for Fannie Mae and Freddie Mac loans. 4 - The Department of Justice is expected to issue guidance on the prevention of anti-competitive information sharing in the rental market. 5 - The Department of Housing and Urban Development or HUD will work on new rules that require at least 30 days notice before a lease is terminated for a public housing tenant who stopped paying rent. 6 - The Biden Administration plans to hold quarterly meetings with tenants and tenant advocates to make sure their voices are heard. Blueprint for Renters Bill of Rights All this is part of the so-called "Blueprint for a Renters Bill of Rights. The guiding principles include: 1 - Safe, Quality, Accessible, and Affordable Housing 2 - Clear and Fair Leases 3 - Education, Enforcement, and Enhancement of Renter Rights 4. - The Right to Organize Housing Providers Involvement Several housing provider groups are also participating in this effort. The National Association of Realtors or NAR and its affiliate, The Institute of Real Estate Management, have made a commitment to promote resident-centered property management practices. That might include the use of alternative credit scores for applicants who don't have much of a credit history or the sharing of information with an applicant about Housing Choice Vouchers or rental assistance programs. The National Apartment Association and the National Multifamily Association have also made commitments to promote resident-centered management practices. That might include help for tenants who want to improve their credit scores by reporting positive rent payments to credit bureaus. While those agencies are promising those contributions, they are also speaking out against rent control. As mentioned in a Bigger Pockets blog: "Numerous studies have found that the long-term effects of rent control hurt the people these policies intend to help." (3) Why Rent Control Fails There are studies by the Brookings Institution and Stanford that show rent control may provide short-term relief for renters but decrease housing affordability over the long-term. That's because landlords get out of the business, which reduces the amount of available housing, increases demand, and leads to higher rents. The National Apartment Association says that rent control discourages the creation of affordable rental housing including new construction and rental housing renovations. The National Bureau of Economic Research says that rent control keeps smaller families from downsizing and opening up rental space for new larger households. There are several detailed well-informed arguments against rent control, but at the heart of the issue is what is truly happening with rent infla

In this Real Estate News Brief for the week ending January 28th, 2023... what's happening with inflation, a new surge in foreclosures, and the affordability of renting versus buying. 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 latest report on the cost of goods and services shows that inflation is cooling off. The PCE index is the Federal Reserve's preferred measure of inflation and it shows a tiny .1% increase for December. That reduces the annual rate from 5.5% to 5%. When you eliminate the cost of food and gas, the monthly increase was .3% with an annual rate that's down from 4.7% to 4.4%. PCE stands for Personal Consumption Expenditures. (1) We also have a new report on the GDP. The government reports that the Gross Domestic Product grew at a solid 2.9% in the fourth quarter of last year. That's after a reading of 3.2% in the third quarter, and two negative quarters in the beginning of 2022. Economists generally believe that we'll see slower economic growth in 2023 due to the Fed's rate hikes. The rate hikes are meant to slow the economy and help bring inflation back down to the 2% level. (2) The National Association of Home Builders reported on the housing share of the GDP which is lower than normal due to the constrained housing market conditions. The NAHB explains the two housing market components that contribute to the GDP as the residential fixed investment or RFI which includes home building and remodeling. The second component covers housing services like rent, utilities, and the cost that owners would have to pay to rent their own homes. For the fourth quarter the RFI was 4% of the economy while housing services accounted for 11.9%. That's a total of 15.9% of the GDP. Historically, the total is 17 or 18% of the GDP with an average of 5% for the RFI and 12 to 13% for housing services. (3) Weekly jobless claims are down again, to their lowest level since April. Weekly initial claims dropped another 6,000 to a total of 186,000. Ongoing claims were up 20,000 to a total of 1.68 million. Several companies have announced layoffs but that hasn't had an obvious impact yet on jobless claims. (4) New home sales were slightly higher in December. The Commerce Department says they were up 2.3% to a seasonally-adjusted annual rate of 616,000. Year-over-year, they are down 26.6%. That hit a peak of 1.04 million in August of 2020. (5) Mortgage Rates Mortgage rates were down a little more last week. Freddie Mac says the average 30-year fixed rate mortgage was down 2 basis points to 6.13%. 15 year loans were down 11 points to 5.17%. (6) In other news making headlines... Foreclosure Rate Doubles Foreclosure rates are rising once again, but have not returned to pre-pandemic levels. ATTOM Data says they more than doubled in 2022 compared to 2021, with a 115% increase. In 2022, there were foreclosure filings on .23% of all housing units. In 2021, foreclosure filings accounted for just .11% Back in 2019, before the pandemic, they accounted for .36% of all properties. (7) ATTOM's Rick Sharga says: "Government and mortgage industry efforts during the pandemic, coupled with a strong economy, have helped prevent millions of unnecessary foreclosures." States with the highest number of foreclosure starts last year include California, Texas, Florida, Illinois, and Ohio. Foreclosures hit a peak at the height of the housing crisis in 2009 and 2010. Back then, almost 2-and-a-quarter percent of all homes went into foreclosure. Renting Now Cheaper than Owning in Most Areas Research from ATTOM Data also shows that renting is now more affordable than owning in 95% of the places where most people live. That's a complete reversal from last year when it was more affordable to own your own home in 60% of the markets that were analyzed. (8) Rick Sharga commented on the change in affordability saying "What a difference a year makes." The study was based on the average three-bedroom rent compared to owning a similar sized home. The only place where it was more affordable to buy than to rent was in Cook County near Chicago. Homeowners in that area typically pay 40% of their paycheck for housing while renters pay 38%. If you'd like to learn more about investing in today's rental housing market, check out our virtual live event on February 11th. It's an all-day event featuring ten property teams in 11 markets and one commercial broker. You can find out more by joining RealWealth for free at newsforinvestors.com and registering for the event. If you miss it, we will have some of the sessions available on the RealWealth website for a replay. But if you want to see all of it, you'll need to attend. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.marketwatch.com

It's a worst-case scenario for homeowners in a suburb of Scottsdale, Arizona. Due to drought conditions in the Southwest, the water supply for Rio Verde Foothills has been shut off. Residents have been left scrambling for water. They have filed a lawsuit, but the bigger question is whether the building boom can continue in Arizona. Land has been inexpensive in Arizona but without enough water, is land really that cheap? 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. Scottsdale supplied Rio Verde Foothills with water for decades, since it sprouted into existence in the 1970's. It's an unincorporated part of Maricopa county with about 600 homes and about 1,000 residents. The water was trucked in, but with a decades-long drought and a shrinking supply of water from the Colorado River, Scottsdale says it needs to conserve water for its own residents and can no longer deliver water to Rio Verde. It's not just a wake-up call for the residents of Rio Verde, but for residents across Arizona and the western part of the U.S. where drought conditions are ongoing. In a Time article on the water crisis, the author poses the question: "In an era where climate change is shrinking the water supply, should the desert state (of Arizona) keep building homes that depend on water from elsewhere?" It's a question with significant repercussions at a time when the state is enthusiastically welcoming new residents and encouraging growth. Arizona's population has skyrocketed over the last 50 years and is currently at about 7.35 million residents. Census Bureau data shows that Arizona's population surged 1.3% from July 2021 to July of last year. That represents more than 94,000 people coming into the state and puts Arizona in fifth place for U.S. population growth. The only states with more growth were Georgia, North Carolina, Florida and Texas. (2) Census Data also shows that Maricopa county, where Phoenix, Scottsdale and Rio Verde are all located, is the eighth fastest growing county in the country. Time also reports that it isn't just more and more people but water thirsty companies, like data centers, which are expanding into the area and impacting the precious water supply. Some say that the water supply can no longer support the growth boom, and that's a concept that developers and builders are wrestling with. Arizona's governor, Katie Hobbs released a report that shows a huge water deficit in an area west of Phoenix in the White Tank Mountains where developers want to build. According to Time, these are homes that would house about 800,000 people. But Arizona is now reporting to the local media that developers will have to find their own water supplies or some other solution, before they can build. Since the state's supply of water from the Colorado River is already spoken for, they won't be getting it from there. If they can't get enough from the ground, they may have to truck it in, which didn't work very well for the residents in Rio Verde. Other ideas have included a pipeline from some distant water saturated area, or from a desalination plant that's yet to be built in Mexico's Sea of Cortez. With drought and climate change issues intensifying, these kinds of ideas are coming to the forefront. Developers see the water pipeline idea as a way to create a stable source of water that will sustain growth for years to come. And maybe that's what the Southwest real estate industry needs. But Time reports there's also the unmentionable idea that growth cannot continue as it has been, and the pipeline/desalinization idea is the only inevitable solution. It comes with several drawbacks however. First, the process involves wastewater that would probably be dumped back into the Sea of Cortez and potentially harm sea life. The pipeline would also cut through Organ Pipe National Monument in Arizona, and across land in Mexican territory, which might not sit well with various groups of people. Desalination is also very energy intensive and could generate a lot of greenhouse gas emissions. Cary Meiser of the Yuma Audubon Society says: "We as Arizonans can't just keep taking water from somewhere else without considering how it impacts the people and places we're taking it from." On top of those drawbacks, the desalination isn't cheap and is sure to increase the cost of water for customers. Time reports that cities and states typically pay about $50 to $150 for one acre-foot of water, which is about what a family of three in Phoenix would use in a year. The cost of desalination would add about two- to three-thousand dollars onto that price for the same quantity of water. If water gets that expensive, it's sure to impact Arizona's real estate industry. Properties with a secure source of water will suddenly be more valuable, while others lose value. Banks may also be more willing to make loans to properties with stable, less expensive water. Currently, the Color

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/