Real Estate News: Real Estate Investing Podcast

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In this Real Estate News Brief for the week ending August 6th, 2022... the Fed's next move, a mortgage rate rollback for home buyers, and a new all-time high for single-family 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. Economic News We begin with economic news from this past week. Federal Reserve policymakers say they are "nowhere near" the end of their fight against inflation. Four Fed Presidents spoke out on Tuesday, August 2nd, about their resolve to get inflation back down to 2%. San Francisco Fed Chief Mary Daly said that she is currently seeing a 50 basis point rate hike as appropriate in September, but she says: "If we just see inflation roaring ahead undauntedly, the labor market showing no signs of slowing, then we'll be in a different position where a 75-basis-point increase might be more appropriate." Comments from the other three Fed Presidents were similar. (1) And then there was a screamingly strong jobs report a few days later. The Bureau of Labor Statistics reported on Friday that hiring in July exceeded expectations. Nonfarm payrolls were up 528,000, and the unemployment rate dipped lower, to 3.5%. To put this in perspective, in the years leading up to 2020 when the economy was robust, job creation was closer to 195,000 per month on average. The unemployment rate is now back to its pre-pandemic level. As reported by MarketWatch, it's tied for the lowest level since 1969. (2) Some economists see the strong jobs report as signs that the Federal Reserve will lean toward a more aggressive rate hike in September. KPMG Chief Economist Diane Swonk said in a CNBC report: "This is hot. For the Fed, this is another 75 basis point hike." (3) The unemployment report shows a slightly elevated level of new claims. During the last week of July, 260,000 people applied for benefits which is an increase of 6,000 from the week before. The number of continuing claims was also higher by about 48,000. That brings the total number of continuing claims up to about 1.42 million, which is the highest level since April. (4) A new report on home price growth shows that year-over-year prices were up 18.2% in June. On a month-to-month basis, the CoreLogic report says they were up .6% for the 125th consecutive month of higher prices. This is more inflationary news that may convince the Fed to be more aggressive with rate future hikes. However, the report does shows that price growth is slowing down. CoreLogic expects it to drop to 4.3% by next June. (5) Higher home prices also increase homeowner equity. CoreLogic says the average borrower had $280,000 in home equity at the end of the first quarter. That's a gain of about $64,000 over the past year, and a gain of about $125,000 over five years. (6) Those folks expecting a housing crash will have to consider why homeowners with so much equity and low fixed rate mortgage payments would suddenly abandon their homes. Higher home prices are slowing sales, and that's driving up inventory levels, but they are still nowhere they need to be. According to Realtor.com, active listings are about 30% higher than they were a year ago but are less than half of what they were in June of 2019 and about two-thirds of where they were in June of 2020. The good news is that homebuyers have a few more homes to choose from and a little extra time to make a decision, but only a little extra time. The Realtor.com trends report says that homes are spending just ONE extra day on the market compared to last year.(7) New home builders are also experiencing a sales slowdown and higher inventory levels. According to the Federal Reserve Bank of St. Louis, there are more than nine months supply of newly-built homes on the market. However, it can be difficult to gauge new home inventory because many of those homes are experiencing construction delays and not sales delays. (8) Another sign of the housing market slowdown is a sharp drop in construction spending. The Commerce Department reported a 1.1% decrease in June. Private residential construction took the biggest hit. It was down 1.6%. (9) Ironically, the construction of new homes is what's needed to increase supply, yet builders are generally the first to get hit with higher interest rates. A slow down in new home construction could mean continued bidding wars on existing homes in growth markets. Mortgage Rates Home buyers are getting a break right now on their mortgage rates. Freddie Mac says the average 30-year fixed-rate mortgage dipped below 4% for the week ending August 4th. They dropped 31 basis points to an average of 4.99%. The 15-year dropped 32 points to 4.26%. Freddie Mac's Chief Economist, Sam Khater, says: "Mortgage rates remain volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth." (10) You may be wondering why mortgage rates have gone down when the Fed fund rate is going up. Mortgage rates are ge

In this Real Estate News Brief for the week ending July 30th, 2022... a negative GDP report, inflation heads higher, and the Fed's latest rate hike. 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 carried out its fourth rate hike this year to slow inflation, and the second increase of .75%. That puts the top end of the overnight lending rate at 2.5%. Higher rates make it more expensive for businesses and consumers to borrow money and that helps slow the economy, and the rate of inflation. (1) The latest reading on inflation was a report on the PCE or Personal Consumer Expenditure Index. That shows a 1% increase in June to a yearly rate of 6.8%, which is the highest since January of 1982. When you eliminate fuel and food, the core PCE is 4.8%. The Federal Reserve considers the PCE to be more accurate than the CPI because it takes into account other variables, such as consumers shopping for different, lower-priced items. (2) Fed Chief Jerome Powell has said repeatedly that inflation is too high, but he said during a press conference after the latest rate hike, that the U.S. is not in a recession despite a second quarter of negative economic growth. The government says the economy shrank at an annual pace of -.9% in Q2. That's after a -1.6% loss of economic activity in Q1. Two consecutive quarters of negative growth is the standard definition of a recession, but thanks to a number of things bolstering the economy, such as a strong job market, many economists, including Fed Chief Powell, don't believe we're there yet. (3) Powell said several times that the central bank will do whatever it takes to control inflation, which may put the U.S. into a recession at some point. He suggested more rate hikes in the coming months but didn't give any forward guidance because the situation is so volatile. The Fed expects short-term interest rates to hit 3.5% by the end of the year. Some economists are predicting a 50 point hike in the next meeting followed by two 25 point hikes. (4) Initial jobless claims had been slowly rising, but were about 5,000 applications lower last week. The Labor Department says they fell to a total of 256,000. Ongoing claims were also lower. They were down 25,000 to 1.36 million. (5) On to the housing market… New home sales fell to their lowest level since the pandemic began. They were down 8.1% in June to a seasonally-adjusted rate of 590,000. The year-over-year drop is 17.4%. Many consumers can't afford a high-priced home combined with a higher mortgage rate. The median sales price of a new home was $402,400 in May. (6) Pending home sales for existing homes also tumbled in June. According to the National Association of Realtors, they were down 8.6% for the month and 20% year-over-year. As MarketWatch reports, potential home buyers are spooked by high home prices and inflation in general, higher mortgage rates, and talk of a recession. NAR's Chief Economist Lawrence Yun says that buying a home in June of this year was 80% more expensive than it was in 2019. (7) *But home price growth has started to slow down. The S&P CoreLogic Case-Shiller Index shows a year-over-year price growth of 19.7%. That's down from 20.6% in April. (8) Keep in mind that the Case Schiller index is a lagging indicator, and a lot has changed in the market since May. As for consumer thoughts on the economy… The Conference Board reports that confidence levels fell for a third month in a row to a reading of 95.7. Economists like to say that consumer spending is still robust, but the International Monetary Fund says that's at higher income levels. One member of the Conference Board, Lynn Franco, says that consumers will likely face "headwinds" over the next six months as they deal with inflation and additional rate hikes. (9) A survey on consumer sentiment by the University of Michigan shows similar results. It was up slightly at the end of July but is still near the lowest level on record. (10) Mortgage Rates Mortgage rates are falling as home buyers sit on the sidelines. Freddie Mac says the average 30-year fixed-rate mortgage was down 24 basis points last week to 5.3%. The 15-year was down 17 points to 4.58%. (11) In other news making headlines... Will the Latest Rate Hike Impact Mortgages? The Fed's rate-hiking plan has created concern that mortgage rates will continue to move higher. The two are not directly related, although higher short-term rates often do influence mortgage rates. But NAR's Lawrence Yun doesn't think mortgage rates will move much higher this year. He says: "The long-term bond market on which mortgage rates are generally priced has mostly priced in all future actions by the Fed and may have already peaked with the 10-year Treasury shooting up 3.5% in mid-June." (12) He feels that the 30-year fixed will settle down at 5.5 to 6% for the rest of

The latest reports on inflation have given the economy indigestion. The Consumer Price Index hit 9.1%, the Producer Price Index hit 11.3%, and the Fed's preferred gauge, the Personal Consumption Expenditures Price Index or PCE, hit 6.8%. They are all signs that inflation is much too high and the reason the Federal Reserve just hiked short term interest rates another whopping three-quarters of a percent. So what's the best way to invest when inflation is working against you? (1, 2, 3) 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. Four Peaks Capital put together a great list of all the options that I received in an email which I will share with you in this episode. The company is mostly focused on large multi-family projects, but this list pertains to everyone. Investing Options 1 - First on the list is cash. It's not an investment as much as it is a way to preserve a certain quantity of money. But when there's a high rate of inflation, that same quantity of money will be worth less over time. As Four Peaks explains: Putting $100,000 under your mattress for something you want to buy in a year, won't cover the cost. At today's rate of inflation, you'll need an additional 9.1% or $9,100. So hiding your money under the mattress isn't a great idea if you don't want to lose money. Warren Buffett would agree. He says: "The first rule of an investment is don't lose money. The second rule of an investment is don't forget the first rule." Let's take a look at your other options. 2 - You can invest in stocks. Wall Street is a magnet for investor enthusiasm and money, but people are often invested at the worst possible times. A period of inflation is typically one of those times. As inflation rises and the Federal Reserve raises rates, stocks often fall because it'll cost more money for companies to get the funding they need to do business. We've seen some major stock losses lately because of investor concerns on inflation. 3 - Crypto, Blockchain, and NFTs have become a new investment category, and it's gotten a lot of attention, but it's also very volatile. The crypto market had soared to a peak of about $3 trillion dollars, but when the economy got choppy, crypto got chopped. Investors liquidated their gains and the crypto market quickly shrank to just $1 trillion. The high-flying leader of the pack, Bitcoin, had actually hit $69,000 earlier this year but is now down to one third of that value. 4 - You can buy Certificates of Deposit, or CDs, as a more traditional and safer way to invest money. NerdWallet has a list of CDs, and its top choice is a CD with a fixed 5-year term at 3.35%. But even that percentage won't make you money because inflation is so high. At 9.1%, inflation wipes out the gain and leaves you with a -5.75% loss. 5 - You can put your money into a Money Market Account. But the interest you'll earn is even less than a CD. It's more like 1% right now, although that could increase as the Fed raises rates, but at 1%, you stand to lose -8% of your investment because of inflation. 6 - High-Yield Savings Accounts are another option. They are supposed to give you a better interest rate than money market accounts. But the extra bump in interest only reduces the loss you'd get from a CD by a tiny amount. 7 - Annuities can provide better gains, but they still don't offset today's rate of inflation. Four Peaks explains it like this: "Some of the best fixed-income annuity rates right now hover in the 4.5% range, but that doesn't take into account administration fees of 1-3% annually, putting real rates at 1.5% to 3.5%. In the best-case scenario, the annual loss of the best annuity is -5.6% when considering inflation." 8 - And then you have Treasuries. The 10-year treasury might give you 2.96%, but when you account for inflation, you end up with a loss of -6.41%. So, we've run through "eight" investing options and none of them make your money grow when inflation is as high as it is. That leaves us with an eighth option that covers a lot of "ground," no pun intended. As Four Peaks puts it: "Cash flowing tangible assets tied to essential goods… that consumers will always need… like shelter." Four Peaks says: "That's why certain classes of commercial real estate like affordable housing will thrive in downturns." 9 - The ninth option is real estate. At RealWealth, we focus on single-family rentals which also provide a tangible asset that's in high demand. The foreclosure crisis produced the first big surge in demand for single-family rentals. And now we're seeing a new surge because people who can't afford to buy a home, still crave the single-family lifestyle. We recently had an investor on my other podcast, The Real Wealth Show, who was not discouraged by today's market. Jimmy Vreeland believes that the housing market slowdown is providing an opportunity for investors to find deals, and there's no better time to buy real estate than t

The quitting trend that started during the pandemic is still here, and it's not going away anytime soon. Job market trends are important to real estate investors because housing markets rely heavily where people are working. In this episode, you'll hear about how the job market has changed, why more workers are quitting or changing the way they work, and the kinds of jobs they are seeking. (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. This quitting trend has been called The Great Resignation, but a new study by McKinsey and Co. describes it as The Great Attrition which is now turning into The Great Renegotiation. This is happening because more and more people are rethinking their work-life balance and renegotiating the terms of their employment with a greater emphasis on their personal lives. The Great Renegotiation To get an idea of the magnitude of the change we're seeing, data from the US Department of Labor shows the voluntary quit rate is 24% higher now than it was before the pandemic. Companies are scrambling to fill positions and keep them filled. In April of last year, there were 9.3 million job openings. Fast forward to May of this year, and there were 11.3 million job openings. That's an increase of two million unfilled positions. As the McKinsey study points out, there's a huge mismatch between the number of available jobs and the number of workers eager to fill those positions. What the study reveals about the current situation is that many companies are trying to fill an abundance of traditional positions with traditional workers, and that's where things have changed. Although some 60% of workers are still traditionalists, according to this analysis, there's a growing number of workers who won't accept the old way of doing things. The McKinsey analysis includes survey responses from 13,000 people in six countries who answered questions between February and April of this year. 6,294 were Americans. One of the authors of the report, Bonnie Dowling, says of the work world: "This isn't just a passing trend, or a pandemic-related change to the labor market. There's a fundamental shift in workers' mentality, and their willingness to prioritize other things in their life beyond whatever job they hold." She says: "We're never going back to how things were in 2019." (2) Why Are the Quitters Quitting? The results show three patterns among the quitters. 1 - The first is a desire to "reshuffle" their careers. That's driving the reshufflers from one industry to another. In fact, 48% of the non-traditionalists are reshufflers. But the exchange of employees is not balanced so that some industries are losing more workers than they are getting in return. 2 - The second pattern shows a desire to "reinvent" their careers. That might take the form of an employee transitioning from a traditional full-time job to one that's not traditional. That could include work that's part-time, temporary, remote or non-traditional in some other way. 47% of the survey participants fall into this category. 3 - The third pattern is one the study calls "reassessing." That's when people quit their jobs altogether to take care of personal needs and reassess their priorities. They might quit to take care of children, older relatives, or even themselves. Discontent Varies from Country to Country The desire to quit varies from country to country with India at the top of the list for discontent. The study shows that more than 60% of the workers in India want to leave their jobs. The second highest level of discontent was in Singapore, at 49%. The other four countries in this study include Australia, Canada, the United Kingdom, and the United States. Taken together, 40% of the participants expressed a desire to quit within the next three to six months. So what is it that makes a job that motivates workers to quit or to stay? The survey says that workplace flexibility is the most important factor in preventing employees from quitting. Meaningfulness of work is also right up there. Other factors include support for an employee's health and well-being, a safe workplace, and inclusivity. Geographic ties also play into this equation, although it could be a moot point with remote workers. The things that drive employees away include a lack of adequate compensation. No surprise there. Following that, employees quit when the job doesn't live up to their expectations. It could be a lack of career development or advancement opportunities. They also want reliability and support from colleagues, and bosses that are caring and inspiring. Five Worker Personas But that's only part of the picture. The analysis shows a total of five worker personas with the traditionalists accounting for the largest share. They are the first type of persona and make up 60% of the workforce. The four other personas account for the remaining 40% and they are the ones who are most likely t

In this Real Estate News Brief for the week ending July 24th, 2022... how Yellen would like to fix the supply chain, a return to 2007 housing affordability, and the latest way to make rental income off your property. 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 reassurances from former Fed Chief Janet Yellen. She said during an interview on NBC's "Meet the Press" that the U.S. economy is slowing down, but says that a strong job market is proof that we're not in a recession. (1) Her words come before a week of important economic reports. Coming up in the week ahead, the second quarter GDP, inflation, consumer income and spending, and what is expected to be a three-quarter point rate hike by the Federal Reserve. Let's rewind to this past week. Although hiring is strong, the government reports a jump in state unemployment claims. They were up 7,000 to 251,000. Wall Street economists had expected a slight decline in those initial claims. Currently, there are 1.38 million collecting unemployment checks. (2) The housing market slowdown continues. Housing starts fell in June. the Commerce Department reports that they were down 2% in June to 1.56 million new home starts. That's also a 6.3% annual drop in starts and the lowest level since last September. Building permits were also down .6% to 1.69 million. Breaking the report down further, construction starts fell 8.1% for single-family homes while apartment starts were "up" 15%. The number for permits were similar. (3) As a real estate investor, it's important to remember that the housing market is "local" so national numbers don't tell the whole story. The National Association of Home Builders issued a report on permits showing the top ten markets for single-family construction. At the top of the list is Houston, followed by Dallas-Fort Worth, Phoenix, Atlanta, Austin, Charlotte, Orlando, Nashville, Tampa, and Jacksonville. Despite the overall slowdown, some markets are still fired up. (4) Demand is still strong for single family homes, but prices have gotten too high for some buyers. The National Association of Realtors says that existing home sales fell 5.4% to a seasonally-adjusted annual rate of 5.12 million homes in June. That's the weakest they've been since the start of the pandemic, and compared with last year, they are down 14.2%. (5) In addition to high home prices, sales are being impacted by higher mortgage rates and a lack of more affordably priced homes. (5) Housing market conditions have weakened home builder confidence. The NAHB says the monthly confidence index dropped 12 points to 55 in July. That's a larger-than-expected decline, and the second largest since the association created the index. As a comparison, the index was at 80 last July. (6) Mortgage Rates Mortgage rates crept a little higher last week. Freddie Mac says the average 30-year fixed-rate mortgage was 3 basis points higher to an interest rate of 5.54%. The 15-year was 8 points higher to 4.75%. (7) In other news making headlines... Yellen on Supply Chain Issues Yellen offered a suggestion for supply chain issues. She said that allied countries could strengthen their supply chains by "friend-shoring." The term is similar to "onshoring" which refers to production or operations within our borders. (8) She says she's not discouraging trade with any country, but says that by working more with trusted partners, supply chains would be more resilient when there's some sort of global emergency or conflict. Housing Affordability Near 2007 Level Housing affordability is hovering near 2007 levels. A report by S&P Global Ratings shows that homebuyers will have to pay about 28% of their income on mortgage payments by the end of this year. That's the highest percentage since the first quarter of 2007. NAR guidelines state that a homeowner's mortgage payment should not be higher than 25% of their paycheck. (9) That calculation is based on a 10% down payment. The analysis also shows that it will take entry-level buyers 11.3 years to save up for that down payment. It's more than twice as long as a pre-pandemic rate of five years. Swimply There's more ways than one to make money renting some part of your home. A website called Swimply makes it easy to rent out your pool for hours at a time. A CNBC Make It blog profiled an Oregon resident who spent $110,000 building a luxury pool ten years ago, and over the last two years has more than made that money back. (10) He says it's important to know a lot about pool maintenance and water chemistry. He also says that he was a lot busier when there were fewer people doing the same thing because there are now a lot more pools for potential customers to choose from. That's it for today. Join RealWealth for free here. Check the show notes for links, and remember to hit the subscribe button for the latest news on re

Foreign investors are returning to the U.S. real estate market after a pandemic-related dry spell. A new survey by the National Association of Realtors shows a big increase in the dollar value of properties bought by foreign buyers in the last year. They had all but disappeared during the pandemic, but are slowly coming back – especially now that most travel restrictions have been lifted which makes it easier to visit properties before they 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. The National Association of Realtors surveyed members about transactions they've done with international clients and released the results in a report called 2022 Profile of International Transactions in U.S. Residential Real Estate. (1) The transactions would have taken place between April of last year and March of this year. NAR Report on Foreign Buyers Foreign buyers purchased a total of $59 billion worth of existing homes during that time. That's an 8.5% increase from the previous year, but inflation is contributing to that figure. The report also shows that the total number of properties fell 7.9% because you can't buy as much house for your money right now. So how many homes did that money buy? According to NAR, international buyers purchased a total of 98,600 existing homes. That's 2.6% of the 6.12 million homes that changed hands over the last year. NAR's chief economist Lawrence Yun believes that high home prices have discouraged some foreign investors. He said in the press release: "Affordability challenges along with the inability to find the right property were the top reasons given for prospective international buyers who showed interest but ultimately did not purchase a home in the United States." He also believes that travel restrictions discouraged some potential buyers. He says: "For a second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers." Two Groups of Foreign Buyers The report separated foreign buyers into two groups including those who recently immigrated to the U.S. or live here on a visa and buyers who live in another country. The first group accounted for more transactions. It says that foreign buyers living here purchased just over $34 billion dollars worth of existing homes. That's up 5.2% from the previous year. Foreign buyers who don't live in the U.S. spent almost $25 billion during that same time period. That's up 13.2% from the previous year. Buyers from China and Canada spent the most money. Chinese buyers spent $6.1 billion while Canadian buyers spent $5.5 billion. Rounding out the top five are buyers from INdia, Mexico, and Brazil. The most popular destination for international buyers was Florida, for a 14th year in a row. Almost 25% of the homes bought by foreign buyers were in Florida. California was second on that list followed by Texas, Arizona, New York, and North Carolina. Foreign Buyer Forecast Yun is expecting to see an increase in the number of international buyers over the next year, despite high home prices and supply chain issues. He says the strong dollar may also discourage a some buyers, but overall, he says: "Many are purchasing in all cash, so the swings in the dollar are not a deal breaker." He says that U.S. properties still appear inexpensive when you compare them to other countries. As CNN Business reports, a typical property in Hong Kong costs $28,570 a square meter. (2) One in London costs $26,262 a square meter. And in Toronto, it's $10,947 a square meter. Head over to Miami and you only pay $3,170 a square meter. Even San Francisco is cheap, at $8,250 a square meter. Yun told CNN: "Maybe it is a good thing they were absent when US real estate was super hot," said Yun. "No one really missed the foreign market, but given the current shift in the market, with more inventory and homes staying on the market, it might begin to pick up as more international travel is possible." Higher inventory levels are also good for U.S. investors. It's more difficult to find the best deals because of high home prices, but it's not impossible. If you'd like help in figuring out how to find a good deal for your money, you can do that at RealWealth. You need to be a member, but it's free to join at newsforinvestors.com. That will give you access to our network of resources, including our investment counselors. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.nar.realtor/newsroom/annual-foreign-investment-in-u-s-existing-home-sales-climbed-8-5-to-59-billion-ending-three-year 2 -https://www.cnn.com/2022/07/18/homes/foreign-home-buyers-2022/index.html

In this Real Estate News Brief for the week ending July 16th, 2022… a big surge in housing inventory, the rent growth rocket ship, and a supersized prediction for Social Security's 2023 COLA. 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 surprise surge in the consumer price index. The Labor Department says the consumer price index or CPI rose 1.3% last month. That puts the annual rate of inflation at a 41-year record high of 9.1%. That's up from 8.6% in May. The core rate was a little more encouraging. It excludes food and fuel because those prices are so volatile. That was up .7% for June, which brought the annual rate "down" a tenth of a percent to 5.9%. (1) Wholesale prices also jumped higher. The producer price index was up 1.1% in June, mostly due to higher gas prices. That raises the annual rate from 10.9% to 11.3% - for wholesale prices. Again the core rate offered better news. It was only up .3%. That brought the annual rate down slightly, to 6.4%. (2) Inflation isn't discouraging consumer spending. The latest report on retail sales shows a solid 1% increase in June, but people are also buying things at higher prices. When you adjust for inflation, it appears that retail sales fell slightly. Senior economist for BMO Capital, Greg Daco, told MarketWatch: "American households are spending nearly as much money as they did earlier, but largely to keep up with higher prices, not to actually buy more stuff." (3) Initial jobless claims crept higher. The Labor Department says there were about 9,000 more claims last week than the week before, for a total of about 244,000 applications. The number of continuing claims dropped by a lot more. They were down about 41,000 to 1.33 million. (4) Mortgage Rates Mortgage rates aren't sitting still. After a big drop the week before last, they were up 21 basis points last week. Freddie Mac says the average 30-year fixed-rate mortgage was 5.51%. The 15 year was up 22 basis points, to 4.67%. (5) In other news making headlines... Home Buyers Canceling Contracts More and more home buyers are backing out of their contracts because of the high prices. A new Redfin report says home sale cancellations were just under 15% in June. That's the highest level of contract cancellations since the start of Covid, when the economy briefly shut down. One year ago, in 2021, home buyers were canceling about 11% of their deals. (7) Redfin's deputy chief economist, Taylor Marr, says we're seeing the increase for a number of reasons. One is that home buyers have less competition and more time to back out of a deal if inspections or appraisals don't go their way. They may also get a higher mortgage rate than they expected and discover they no longer qualify for a particular home. Or they may feel that home prices will decline and they could get a better deal by waiting. There's also worry about a recession, and how that could impact their paychecks. Housing Inventory Rebound Meantime, a slowdown in sales is having a positive impact on inventory, which is quickly increasing. Calculated Risk reports that it was up 3.2% over the July 4th weekend. That's unusual because it's typically a busy weekend for homebuyers, and inventory levels are usually flat or slightly lower. (8) On a year-over-year basis, inventory is up around 32%, but the inventory problem has not yet been resolved. It's still at historically low levels. While it's up year-over-year compared to last year, it's down 25% compared to the same week in 2020. Soaring Rents Could Be Peaking With more and more homebuyers getting priced out of the market, rental demand is strong, and that's pushing rents higher. The Labor Department says the rent of a primary residence was .8% higher in June that it was in May. That's up from a .6% increase the month before. (9) Some economists say that rent growth "may" be peaking. Moody's chief economist, Mark Zandi, says: "Market rent appears to be topping out, as renters are not able to afford the higher rents and are balking." He says: "More rental supply is also coming." RealPage reports that 836,000 multifamily units are under construction, which is the most since 1973. Huge COLA Predicted for Social Security People getting Social Security could get a big pay raise next year. The Senior Citizens League is estimating a 10.5% cost-of-living adjustment, which is also known as a COLA. The exact amount will depend on what kind of inflation we see for the rest of the year. (10) The average monthly social security check is $1,668. A 10.5% increase would bump that up $175 to a total of $1,843 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 get more in-depth information about the housing market at our website. We have hundreds of articles and webinars that you can check

Home buyers are getting cold feet because of high home prices and mortgage rates. A new report from Redfin shows the number of buyers canceling deals is now the highest it's been since the beginning of the pandemic. The pullback is also impacting builders. A report by John Burns Real Estate Consulting says they are lowering prices as they try to offload inventory. 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 Redfin report shows that homebuyers canceled 15% of the deals that went under contract in June. That's about 60,000 deals and the highest percentage of cancellations since the early days of the pandemic. About a month ago, in May, 12.7% of the deals were canceled. And about a year ago, that figure was 11.2%. (1) More Homebuyers Canceling Deals Analysts say buyers may have different motives for canceling their purchases including the possibility that home prices might go lower in the coming months, and they might get a better deal if they wait. For those who don't want to wait, there's less competition and that's giving them more negotiating power. Redfin's deputy chief economist, Taylor Marr, says there are fewer buyers willing to waive inspections and appraisals, for example. By doing that, they have more time to weigh the pros and cons of a deal and get out if something turns up during the inspection, or the home doesn't appraise. The Redfin report also says that some homebuyers simply don't qualify with the higher mortgage payments. Marr says: "If rates were 5% when you made the offer, but hit 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for the loan." Redfin says that Las Vegas has the highest percentage of cancellations in June at 27.2%. Several Florida cities that have seen strong home price growth are high on the list along with New Orleans, Phoenix, and Houston. It's a long list that ranges from the Las Vegas high to a low of about 2.6% in Newark, New Jersey. Metros that had at least 1,000 pending home sales in June were included in this analysis. Home Builders Lowering Prices Home builders are also seeing higher cancellation rates. A report from John Burns Real Estate Consulting says 9.3% of new home deals were canceled in May. That's almost three percent higher than May of last year. (2) John Burns' senior vice president, Jody Kahn, says: "Buyer's remorse and cancellations shortly after contract are increasing. Builders say that buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline." The cancellation rate for homebuilders varied from region to region within each state. The John Burns research shows the highest cancellation rate at 27% in parts of Texas, and the lowest in some parts of the Southeast at 8%. That research shows that a quarter of the home builders are lowering their prices. A builder in Austin, Texas, told Realtor.com: "Sales have fallen off a cliff. We're selling ⅓ of what we sold in March and April." Housing Inventory Turn-Around One positive impact of this high-price environment is an increase in inventory. A TV station in Texas reports that: "Major housing markets in Texas are finally seeing the beginning of a housing inventory rebound." (3) As you may know, six months of inventory is considered normal for a balanced housing market. We're not seeing that yet, but this report says the numbers are rising in Houston, San Antonio, Dallas Fort Worth, and Austin. Many homebuyers are getting priced out of the market, but the need for housing will not go away. That creates an opportunity for investors, despite the high prices. A recent guest our other podcast, The Real Wealth Show, isn't discouraged by the high prices. His strategy: "You don't wait to buy real estate. You buy real estate and wait." In other words, cash flow will come to those who wait for properties and rents to appreciate. The episode is called: "Invest Now or Wait?" with Jimmy Vreeland. You'll find it under the "Learn" tab and "The Real Wealth Show." And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.redfin.com/news/home-purchases-fall-through-2022/ 2 -https://www.realtor.com/news/trends/scary-times-builders-are-slashing-home-prices-and-slowing-construction-as-buyers-pull-back-survey-shows/ 3 -https://www.wfaa.com/article/money/business/right-on-the-money/major-housing-markets-finally-seeing-the-beginning-of-a-housing-inventory-rebound/287-346525d9-e3f1-4806-a2a9-121940badc45

In this Real Estate News Brief for the week ending July 9th, 2022... why the job market is reducing recession anxiety, the big mortgage rate turn-around, and Airbnb's contest for unique listing ideas. 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 job market is showing a lot of muscle, despite concerns about a recession. The government reported last week that companies created a whopping 372,000 new jobs in June. That's well above Wall Street estimates for 250,000 new jobs. (1) Companies may have a hard time filling all those positions however due to a severe labor shortage. As reported by MarketWatch, there are two open jobs for every person looking for one, or about 11.3 million job openings. (2) Layoffs are also at historically low levels, including the number of people working part-time because they had their hours reduced. The report says there are 3.6 million involuntary part-timers. That's the lowest level in 21 years. (3) Despite that good news, the unemployment numbers are up slightly for last week. The Labor Department reports that initial claims were up 4,000 last week, to 235,000. That's the highest level in six months. They were as low as 166,000 just four months ago. (4) But unemployment is still at 3.6% and the big picture is that job creation and hiring are strong. ZipRecruiter chief economist Julia Pollack says: "This is not what a recession looks like." St. Louis Fed President James Bullard is also seeing signs of economic strength. He's predicting economic growth for the year despite the slowdown we're already seeing due to the Fed's rate hikes. He says he's basing his calculations on "gross domestic income" instead of "gross domestic product." The GDI is the income that's earned on the production of the GDP. While the GDP has already contracted in Q1 and may have done so in Q2 as well, Bullard says the GDI shows that the economy is actually expanding. (5) Mortgage Rates Mortgage rates did a big U-turn this last week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 40 basis points to 5.3%. The 15-year fell 38 points to 4.45%. (6) The drop in rates along with a 5.4% drop in mortgage applications is a sign that the housing market is cooling off. (7) In other news making headlines... On-Time Rent in Underwriting Freddie Mac is making it easier for some renters to qualify for a mortgage. As of July 10th, Freddie is including on-time rental payments in its underwriting system. (8) Freddie started encouraging landlords to report on-time rental payments to credit bureaus last November. It also offered an incentive in the form of closing cost credits for multifamily loans. That apparently attracted a lot of landlords. HousingWire reports that 70,000 households within more than 800 multi-family properties are now enrolled, and that more than 15,000 renters have been able to establish credit scores. Fannie Mae began a similar program last year. Rent Growth Slowdown The latest rent report from Zumper shows a slowdown in rent growth. It says that rent levels typically peak during the summer because a lot of people are moving but this year, Zumper's National Index is up only .5 percent for one-bedroom apartments and down a big 2.9 percent for two-bedroom apartments. That lowers the national median price for a two-bedroom apartment to $1,707, and slightly increases the median rent for a one-bedroom to $1,421. (9) Airbnb Party Ban Now Permanent Airbnb's temporary party ban is now a permanent ban on "disruptive parties and events." That includes open-invite gatherings as well as one-night rentals for a large crowd. Airbnb initiated a ban on "party homes" after an Airbnb shooting in 2019 that killed five people. It then called for a global ban on Airbnb parties at the start of the pandemic. (10) The global ban has reduced complaints by 44% but hasn't stopped them altogether. Airbnb says that people booking remote accommodations can often invite as many people as they want without getting caught. Airbnb says if they are caught, they could face consequences, including suspension or a permanent ban from the website. Airbnb OMG! Fund On a lighter note, there's still a few weeks left to participate in Airbnb's search for the craziest listing ideas, and the winners will get a hefty sum of money to make their crazy ideas a reality. Airbnb is funding the contest with a $10 million "OMG! Fund." That's enough money to give 100 people $100,000 each to help finance these projects. The ideas will be judged on originality, feasibility, the experience the space will provide to guests, and sustainability. The deadline to apply is July 22nd. Check for a link in the show notes at newsforinvestors.com if you want to know more! The Airbnb announcement includes a lot of examples for inspiration. That's it for today. Please remember to hit the subscribe button, a

Economists have been weighing each twist and turn of the economy to determine whether we are going "up" or "down." Many are predicting a recession at some point, while a few say we're already in a recession because the economy is contracting. But does this economy show the typical signs of a recession? One MarketWatch contributor doesn't think so. 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 may know, two quarters of negative economic growth are usually interpreted as a recession. We've already seen negative growth in the first quarter. The economy contracted at an annual rate of 1.6%. And now, there are analysts and GDP trackers that are predicting the second quarter will decline as well. The Q2 numbers won't be out until the end of this month, but in the meantime, there are plenty of people looking at historical patterns to determine what might be happening, or not happening. Economy Still Quite Healthy MarketWatch contributor, Jeffrey Bartash, doesn't believe the typical definition of a recession will hold true this time around. He says the report we see on the "gross domestic product" is often reduced to simple headlines that don't tell the whole story, and that, right now, "many parts of the U.S. economy still seem quite healthy." (1) For one, consumer spending and business investment both rose in the first quarter. Consumers are well employed with plenty of savings from the pandemic, while businesses are creating hundreds of thousands of jobs that they can't fill because of a labor shortage. The unemployment rate is 3.6% which is close to a 54-year low. That makes layoffs less likely, even if the economy sputters in the months ahead. Blame the International Trade Deficit But the economy did decline in Q1. Bartash says it's not because the economy is in bad shape. He says it's because of a surge in the international trade deficit, and that happened because of supply chain issues. Many companies placed bigger orders for foreign goods to "stock up." But the surge in goods coming into the country also made it look like our economy was slowing down. There's a group of eight economists at the National Bureau of Economic Research who study all the details of a potential recession. Bartash says they pay special attention to hiring, unemployment, manufacturing, consumer income, and consumer spending, adjusted for inflation. And he says none of those data points support the idea of a U.S. recession, right now. NBER's Definition of "Recession" The NBER's definition of a recession is a little different than two consecutive quarters of negative economic growth. It says a recession happens when there's "a significant decline in economic activity that is spread across the economy and that lasts more than a few months." It also says that a downturn has to be "deep, broad, and long-lasting" before it's considered a recession. We still have about three weeks before the official report comes out on the second quarter GDP. As Bartash points out, a lot can change between now and then, and between now and next year. This is why some economists are predicting a potential downturn or recession in 2023. But most agree, an economic slowdown has already begun. As Senior Wells Fargo Economist, Sam Bullard, told CNBC: "There are certainly a lot of challenges ahead. The latest incoming data clearly signals there has been a loss of momentum." Economic Challenges Ahead A few weeks ago, the Federal Reserve lowered its full-year GDP estimate to just 1.7% from 2.8%. Both those numbers are substantially lower than last year when the GDP was 5.7%. (2) The central bank lowered its outlook after it announced the biggest rate hike in 28 years to help curb inflation. It raised the Federal Funds rate 75 basis points, and is now planning to do the same at its July meeting. Fed Chief Jerome Powell has emphasized the need to fight inflation. The Consumer Price Index hit 8.6% in May. Higher interest rates will help slow the economy by making money more expensive. It'll cost more for things like credit cards, car loans, business loans and adjustable rate mortgages. Fixed-rate mortgages are also impacted indirectly, and they've been shooting higher as well. The cost of a 30-year fixed rate mortgage has doubled since last fall from around 3% to around 6%. Why Consumers Are Doing So Well Economists feel that most consumers are doing well so far because unemployment is low and many are flush with savings. They didn't spend as much on things like clothes, gas, travel, and entertainment during the pandemic.. MarketWatch says that consumers have more than $2 trillion in "excess" savings. Many employees are also getting bigger paychecks because of the labor shortage and pay raises meant to keep them from leaving. All that helps offset higher prices. According to the MarketWatch assessment, a lot depends on how much the Fed has to raise rates before we see inflation

The housing market may be slowing down, but new homes are still a complicated, expensive process, mostly because of supply chain issues. One Bank of America analyst, who co-authored a new report on residential construction, says it's like a game of whack-a-mole. He says: "Every time they find one thing that they fix, another one pops up." 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. BofA just released its 2022 "Who Builds the House" report, which found that a shortage of building materials is one of the primary reasons for higher home prices. According to co-author Rafe Jadrosich, prices have risen at an "unprecedented rate" over the last few years because of the shortage of building materials. He told MarketWatch: "There's always a new category that's creating the bottleneck." (1) "Who Builds the House?" The report says that the cost of materials to build a home went up 42% in just three years, from 2018 to 2021, and that it has consistently outpaced the rate of overall inflation. Additional costs for materials add approximately $35,000 to the price tag, and bring the total amount for raw materials to around $118,000. That's about a third of the cost of a new home. The other two-thirds of the cost go towards the land, and the labor, which can vary from region to region. Rising inflation is also contributing to higher costs for all the things needed to finish a home including window treatments, floor coverings, appliances, and household furnishings. MarketWatch reports that the index for household furnishings and operations rose .04% in May with an annual rate of increase of 8.9%. The BofA report used data from the National Association of Home Builders, and analyzed 14 different expense categories, to determine how much it costs, on average, to build a new home. Framing Lumber and Engineered Wood The dominant category is the lumber needed to frame a home. Nine out of ten homes are framed with lumber. That can be natural wood or engineered wood, which is a mixture of wood fiber and plastic. The report says 30.2% of the material used to build a home falls into this category. The cost for this portion is about $35,500, and right now, lumber prices are falling. But they've also been on a roller coaster. Lumber futures have come off a high of about $1,700 for a thousand board feet in May of last year. They were recently down to about $580, but in April of 2020 they were half that amount. Lumber prices are moving contrary to inflation because of a drop in home sales, and a cut back in home starts by builders. Home starts dropped a whopping 14.4% from April to May due to a slowdown in construction for both single-family and multi-family homes. Higher mortgage rates are contributing to the housing market slowdown. Housing experts are predicting that lumber prices will come down farther, but builders are still dealing with high prices for other materials. Concrete for the Foundation Concrete accounts for another big expense category at almost 9% of the total cost of materials. It typically costs around $10,500 for the concrete. Windows and Doors Windows and doors are a big expense. They account for another $10,500 or about 9% of the cost of materials, but those costs are under pressure because windows and doors are consistently hard to find. Builders have been scrambling over the last year to get what they need to finish homes. As Jadrosich explains, if you haven't installed the windows: "You can't put your appliances in, or paint your walls, or finish your floors." He says until that situation improves, "you're gonna have a pretty slow, elongated build cycle for a lot of the home builders." A recent New York Times article says it all in the title: "4 Bed, 3 Bath, No Garage Door." ((One of our RealWealth development projects experienced this kind of supply chain issue last year. The developer had to drive to another state to get the garage door he needed to finish the home.)) Other Materials Other materials that builders must get their hands on include siding, plumbing, cabinets, HVAC systems, roofing, flooring, structural panels, wallboard and drywall, appliances, architectural coating, fiberglass insulation, and paint. Housing Market Slowdown Chief Economist for the NAHB, Robert Dietz, said in a recent press release that the cost of building a home is up 19% year-over-year. He says it's due to "a variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown." (4) And builders are not happy. The NAHB does a monthly survey on builder confidence, and it's been lower for six months in a row. Dietz says it's a "clear sign of a slowing housing market in a high inflation, slow growth economic environment." He says: "The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortg

In this Real Estate News Brief for the week ending July 2nd, 2022... why inflation appears to be slowing, what the GDP says about a potential recession, and the latest reports on 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. The rate of inflation appears to have slowed a bit. The Personal Consumption Index, or PCI, was up .6% in May with a yearly rate that was unchanged at 6.3%, but the core rate was down slightly. The core rate doesn't include prices for food or fuel, and the yearly rate for that dropped from 4.9% in April to 4.7% in May. The Federal Reserve feels the PCI is more accurate than the Consumer Price Index or CPI, because the PCI factors in more variables, such as changes in consumer behavior. (1) It's now official. The economy shrank 1.6% in the first quarter, and the Atlanta Federal Reserve is forecasting a negative reading for the second quarter as well. The Atlanta Fed GDPNow tracker indicates that the economy shrank 1% in Q2. Two consecutive quarters of negative economic growth is interpreted as a recession. But MarketWatch reports that some economists are forecasting growth in the second quarter. We won't have the official reading until the end of this month. (2)(3) As concerns mount about a long-lasting recession, there are now predictions that the Fed will be cutting rates next year, not raising them. CNBC reports that most analysts expect the Fed to continue hiking rates until the end of "next" year, but global chief economist at UniCredit, Erik Nielsen, told CNBC: "Can you really hike interest rates into a recession even if inflation is high? That would be unusual." Michael Yoshikama of Destination Wealth Management also feels that the Fed will reverse its course and cut rates by the end of "this" year. The predictions are all over the map however. The president of the Federal Reserve Bank of Cleveland, Loretta Mester, expects growth to slow but doesn't expect to see a recession. Ark Invest CEO, Cathie Wood, told CNBC that the U.S. is already in a recession. (4) Initial jobless claims were down by about 2,000 last week, to a total of 231,000, but the four-week average is slightly higher. Continuing claims have continued to fall and are now back down to pre-pandemic levels. MarketWatch economists feel that layoffs may remain low because companies have already had a tough time filling positions, and won't want to let anyone go. (5) Pending home sales have rebounded somewhat. The National Association of Realtors says they were up .7% in May after six months of declines. But there are still challenges ahead for the housing market. NAR's chief economist Lawrence Yun says: "Despite a small gain in pending sales from the prior month, the housing market is clearly undergoing a transition." He says: "Contract signings are down sizably from a year ago because of much higher mortgage rates." Year-over-year, they are down 13.6%. (6) Meantime, home prices are up again. The S&P CoreLogic Case-Shiller 20-city index shows a 21.2% year-over-year increase in April. That's up from 21.1% in March. The Federal Housing Finance Agency reports a slightly slower rate of growth. It says that home price growth is up 18.8% year-over-year. (7) Construction spending was down slightly in May, but remained the same for new single-family and multi-family homes. (8) And consumer confidence hit a 16-month low in June, due to concerns about the economy, high prices, and the possibility of a recession. (9) Mortgage Rates The rise in mortgage rates took a break last week. Freddie Mac says the average 30-year fixed-rate mortgage fell 11 basis points to 5.7%. The 15-year dropped 9 points to 4.83%. (10) In other news making headlines… Homebuyers Lose Purchasing Power A new study shows that a typical homebuyer has lost more than $100,000 in purchasing power because of high interest rates. Redfin says that a homebuyer that can afford $2,500 a month in mortgage payments can only buy a home worth about $400,000 right now, or $120,000 less than they could at the end of last year. For someone who can afford $3,500 a month, the budget cut is more like $165,000. (11) Redfin's chief economist Daryl Fairweather says: "Many house hunters now need to consider smaller homes – perhaps farther from their ideal neighborhood – or stick to renting if they're priced out of the market altogether." Rent Growth Hot, but Slowing Rents continue to rise across the country, but the pace is slowing down. The latest report from CoreLogic shows that single-family rents continue to move higher. The year-over-year rate in April was 14%. That's more than double what it was in April of last year. (12) And CoreLogic economist, Molly Boesel, doesn't see it slowing down anytime soon. She says: "We expect single-family rent growth to continue to increase at a rapid pace throughout 2022." A new report fro

Members of Congress are taking a deep dive into the single-family housing market to find out "Where Have All the Houses Gone?" In this investigation, they took a close look at the business practices of the nation's largest landlords – the institutional landlords that buy huge lots of homes at one time. Although the results show an adverse impact on certain communities and potential homebuyers, housing experts argue that investor ownership of rental property is more of a symptom than a cause. (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. This investigation began last fall when a subcommittee of the House Committee on Financial Services sent a survey to five of the largest single-family rental companies in the U.S. Asked to participate in this survey were Invitation Homes, American Homes4Rent, FirstKey Homes, Progress Residential and Amherst Residential. The survey dug into things like where they are buying homes, what they are paying, how much rent they are charging, etc. The final analysis used that information along with government data to come up with a few conclusions. Mass Predatory Purchasing The subcommittee just held a hearing on the results last week. Subcommittee Chair, Representative Al Green, said during the hearing: "We have found that private equity companies have bought up hundreds of thousands of single-family homes and placed them on the rental market." He referred to this practice as "mass predatory purchasing." He also said:"These corporate buyers have tended to target lower-priced starter homes requiring limited renovation; these homes would likely have been bought by first-time buyers, low- to middle-income home-buyers, or both." (2) The investigation also found that a disproportionate number of homes have been purchased in communities of color, and communities with a higher number of single mothers. An examination of the top 20 zip codes where institutional investors have purchased show that about 40% of the population is Black while just 13.4% of the overall population is Black. The number of single mothers is reportedly about 30% higher than average. Other findings include rents that are up 40% over three years from 2018 to 2021, and a doubling of the number of tenants who are behind on their rent. Lawmakers were also critical of automated property management, often used by institutional investors. They say if tenants can't get a hold of someone about a problem, they could be at risk of mismanagement and eviction when problems occur. (3) Investors as a Symptom, Not the Cause Even though the numbers have grown, Representative Tom Emmer sided with landlords, and reminded hearing attendees that 8.6% inflation is having a big impact on housing. He also said that institutional investors still account for a very small percentage of single-family rentals, which appears to mean that they couldn't possibly be a huge part of the problem. Jenny Schuetz of the Brookings Institution also testified that these big investors are not the cause of the housing gap. She says they are a symptom, because of the high demand for rentals and the critically low inventory of affordable homes. She says: "Private equity firms and other institutional investors benefit from tight housing supply, but they did not create the problem. Local governments across the U.S. have adopted policies that make it difficult to build more homes where people want to live." The Executive Director of the National Rental Home Council, David Howard, also spoke out at the hearing. He answered the question about where all the houses have gone in a similar way – that they were never built. He also says that "single family rental home providers are not influencing local and national housing market dynamics." In other words, they are "responding" to housing market dynamics. Collaboration to Find a Solution Howard says that these large landlords along with The National Rental Home Council have been working with the committee, and welcome the opportunity to continue with that collaboration to find meaningful solutions to this problem. In the meantime, landlords are needed to help fill the housing gap. You can find out more about the housing market, the rental market, and the economy by listening to one of my recent webinars. You'll find a replay for my Q2 2022 Housing Market Update at newsforinvestors.com under the "Learn" tab. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409611 2 - https://www.marketwatch.com/story/institutional-investors-have-bought-hundreds-of-thousands-of-single-family-homes-many-in-black-communities-critics-say-its-creating-a-generation-of-renters-11656514935 3 - https://nationalmortgageprofessional.com/news/congressional-committee-exploring-where-have-all-houses-gone

In this Real Estate News Brief for the week ending June 25th, 2022... what the Fed Chief is promising about inflation, what's happening with home price cuts, and top destinations for home buyers, and investors. 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. Fed Chief Jerome Powell expressed his resolve, once again, to control inflation, but also warned that the Fed's aggressive interest rate hikes could result in some job losses. The Fed raised rates by three-quarters of a percent at the June meeting, and is planning to hike it again in July by either a half or three-quarter percent. Powell acknowledges that the Fed misjudged the risk of inflation and should have moved faster with the rate hikes. Powell said: "We did underestimate it. With the benefit of hindsight, clearly we did." He says Fed officials anticipated a speedier end to the pandemic and supply chain issues, but that supply chain problems "remain problematic." (1) Unemployment claims were down slightly last week, but they remain at a five-week high. Economists say it's a sign that the job market is cooling off although there's still a record number of job openings, and not enough employees to fill them. According to MarketWatch, 34 states and U.S. territories show a "decline" in jobless claims, while 19 show an increase. (2) New home sales picked up in May. The Commerce Department reports they were up almost 11% to a seasonally-adjusted annual rate of 696,000. That's a big jump from the April numbers which came in at 629,000. They are still down 5.9% for the year however. Home price growth is slowing, thanks to rising mortgage rates. The median sales price for a new home was $449,000 in May. That's down from a record high of $454.700. (3) Existing home sales were down in May, for a fourth month in a row. According to the National Association of Realtors, they were down 3.4% to a seasonally adjusted annual rate of 5.41 million. There are far fewer existing homes for sale than new homes. While the supply of new homes could last more than 7 months, the supply for existing homes is just 2.6 months. The median price for an existing home has hit a new record high of $407,600. (4) Consumer confidence is dropping as inflation continues. The University of Michigan consumer sentiment index shows it fell to an all-time low of 50 in June. 50 is considered the mid-point between positive and negative on a scale of 100. Consumers are unhappy about high prices and the impact on their standard of living. (5) Mortgage Rates Mortgage rates continue to move higher. Freddie Mac says the average 30-year fixed-rate mortgage rose 3 basis points to 5.81%. The 15-year was up 1 basis point to 4.92%. (6) In other news making headlines… Sellers Are Cutting Prices We're starting to see more price cuts for listed homes. Data real estate firm Redfin says that almost one out of five home sellers lowered their price in May. That's the highest rate of price cuts since October of 2019. (7) Zillow economist Nicole Bachaud told Market Watch that it's a sign of the housing market rebalancing. She says: "The share of listings with a price cut is creeping up, possibly a sign that sellers cannot be quite as ambitious in their pricing strategy as they coil have in recent months." She says homes are selling as fast as they ever have, and the typical homes is selling in seven days for more than the listing price. Homebuyers Love Florida Redfin also did a little research on current trends for homebuyer destinations. It says that buyers are chasing after affordability, and that found that two Florida cities topped the destination list in April and May. Miami was number one as it has been all year, and Tampa pushed Phoenix out of the way for second place. (8) Tampa has become very popular since the start of the pandemic. Prices are up 28% year-over-year, but Tampa remains relatively affordable. A typical Tampa home sells for around $370,000. The national median is $424,000. Redfin says that Tampa is attracting a lot of newcomers from New York and the Northeast. Redfin says it's also attracting a lot of investors, which we, at RealWealth, can attest to. It's a strong market for rental properties, including single-family homes. You can find out more about buying single-family rentals by going to our website at newsforinvestors.com. It's free to join, and free to talk to our investment counselors, and get access to our list of resources. Joining a network is also a great way to meet other like-minded investors like yourself. 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.cnn.com/2022/06/23/economy/fed-jerome-powell-house-testimony/index.html 2 -https://www.marketwatch.com/story/unemployment-claims-fall-slightly-to-229

If history tends to repeat itself, you might wonder whether it's round two for the mortgage industry and the underwriting of risky loans – specifically, for short-term rental properties. It's easy to get into a short-term rental with a loan that's based on future rental income. It's not a new concept for real estate investors, but it's now becoming very popular for short-term rental investing as a way to pay for more expensive properties. On the other hand, it's possible to cover that expense with the expected income. But, what happens to that loan if, let's say, we have a recession and demand dries up for expensive short-term 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. Non-Owner, No Income Loans You may already know a bit about these loans. They are commonly known as NONI loans which stands for Non-Owner, No Income and are based on the future income of a property, and not on the borrower's paycheck. When a lender underwrites this kind of loan, they approve an amount for the purchase of the property that is proportional to future income. According to Realty411, it's typical to get up to a 75% LTV on loans up to $3.5 million. Borrowers don't need to show any income or employment, and they can be first-time investors because qualification is based on the expected cash flow from the property. (1) Those are a few of the basics for a NONI loan. You might also hear them called "debt service coverage ratio" loans, but NONI has a nicer tone. It also means grandmother in Italian. One lender, called "The Lender," is capitalizing on that with an image of a grey-haired woman wearing heart-shaped glasses and flashing a peace sign. (2) What's not to like about that? The ad says: "Our NONI likes Airbnb. The NONI program allows borrowers to use income from vacation rentals, like Airbnb and VRBO… Results without the B.S." So granny will get you a loan for your short-term rental business. Thanks granny! Just to be perfectly clear about NONI loans, they are very common loans for real estate investors. And the real estate investing mortgage market has been booming, but it's unclear how much of that boom is due to short-term rental NONI loans. Loans Based on Projected Rental Income According to Inside Mortgage Finance, lenders issued almost $10 billion in loans to investors last year. That's eight times as much as they did in 2018. Most of those investors qualified for the loans based on projected rental income. Although there's no way of knowing how many were borrowing money for short-term rentals, it appears those numbers are growing. Bloomberg says that rating companies have noticed more mortgages for properties without a lease or for properties with leases that are less than 90 days. "The Lender" told Bloomberg that it expects 60% of its rental-based loans for this year will qualify because of short-term rental income. (3) As it stands, the default rate is usually higher for NONI loans. One analyst says that borrowers who qualify for these loans are three times as likely to default as those with conventional loans. And with an unsteady economy, and the idea of a potential slowdown in the short-term rental market, that could put those borrowers at a higher risk, especially if they are inexperienced. "The Starry-Eyed Inexperienced Investor" As former assistant director at the U.S. Consumer Financial Protection Bureau, Patty McCoy, told B;oomberg: "The influx of the starry-eyed inexperienced investor is artificially boosting demand and causing the rental market to be overheated." She says: "This whole class of loan and, in particular, some of these underwriting practices are a sign of market euphoria. That rarely turns out well." Although some analysts see a parallel here with subprime mortgages that were approved with little or no income documentation, lenders say they underwrite these loans with great care. For one, borrowers must have exemplary credit, and lenders often require experience in the short-term rental market, or at least some amount of experience as a landlord. Some lenders may have tougher requirements than the ones I previously mentioned. For example, Viseo Co-Founder, Jeff Ball, says that borrowers often need a 30% down payment and at least six months of funds in reserve to pay the mortgage. He says the loans that his companies underwrite perform extremely well. He says: "People with good credit have good credit because they have a history of paying their obligations in good times and bad times." But he also acknowledges that in the event of a recession, and a cut back on travel, there could be trouble. He says: "It's an interesting question." Will There be a Short-Term Rental Downturn? Consumers are still whole right now. They saved money during the pandemic, and are now itching to get away. Many of them can also work remotely so a typically shorter vacation can be turned into a longer one. That puts money into the

In this Real Estate News Brief for the week ending June 18th, 2022... the Fed's supersized rate hike, mortgage rate sticker shock, and the home equity bonanza. 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 the Fed's biggest rate hike in three decades. The central bank hiked the federal funds rate by three-quarters of a percent which puts it between 1.5% and 1.75%. If inflation doesn't show signs of slowing by next month, Fed Chief Jerome Powell said they might hike it by another three-quarters of a percent. He doesn't expect that to be a common practice, but he said the Fed is determined to get inflation back down to 2%. (1) The rate hike came after two more hot inflation reports. The Consumer Price Index shows that inflation hit an annual rate of 8.6% in May, while wholesale prices came in at 10.8%. Economists are now looking ahead to the CPI report for June as they anticipate the size of the next rate hike and whether higher rates will tip the economy into a recession. As reported by MarketWatch, the Fed has backed off the idea of a "soft landing" and is running the risk of a recession to get inflation under control. (2) The Fed is currently expecting the economy to slow to 1.7% over the next year-and-a-half with inflation running at 5.2% by the end of this year and 2.6% by the end of next year. It anticipates a slight rise in unemployment, but expects the job market to remain strong. Right now, jobless claims are low while job openings are high. There have been some reports of layoffs, which is contributing to recession anxiety. Last week, real estate companies Redfin and Compass announced layoffs, in response to a slower housing market. Redfin is cutting 8% of its staff, and Compass is cutting 10% because fewer people are buying homes. Many can't afford the high price of the home combined with a more expensive mortgage. (3) The housing slowdown is also impacting residential construction. The Commerce Department says that housing starts dropped 14.4% in May to an annual rate of 1.55 million. That's the biggest decline since April of last year. Multi-family starts dropped the most - by 26.8%. Single-family starts were down 9.2%. Permits also fell but only by 7%. (4) Mortgage Rates Mortgage rates bolted higher last week, for the largest one-week increase since 1987. Freddie Mac says the average 30-year fixed-rate mortgage rose 55 basis points to 5.78%. The 15-year was up 43 points to 4.81%. On a positive note, higher mortgage rates will help control the crazy home price growth we've seen lately. (5) In other news making headlines… Mortgage Rate Sticker Shock The rapid rise in mortgage rates is giving some homebuyers sticker shock. Even though mortgage rates are nowhere as high as they were decades ago, they are at their highest level since about 2008. And that's cutting into homebuyer budgets. (6) The National Association of Realtors says that higher interest rates have chopped about 25% off the homebuyer's budget since the beginning of the year. As an example, NAR says that the typical buyer could afford a $360,000 home with a $1,400 monthly mortgage payment in January. Now, with higher interest rates, that buyer will have to shop for a $270,000 home if they want to maintain a $1,400 a month payment because a larger portion of the mortgage will go toward interest. Homebuyers Are Embracing ARMs One way that homebuyers are dealing with the cost of the loan, is by choosing an adjustable rate mortgage or what's known as an ARM. The Mortgage Bankers Association says that the number of ARMs doubled in May, to help keep initial payments lower. They were as much as a full point lower on the MAXEX exchange. (7) According to the loan-trading platform, MAXEX is a network of 320 banks and nonbank originators, as well as 20 "high-profile investors." It says these lenders have been seeing explosive growth in ARMs and it expects the trend to continue. Big Equity Gains for Homeowners While price appreciation makes it tough to buy a home, most homeowners are feeling a whole lot richer. According to a CoreLogic report, 62% of all U.S. properties rose in value with an average gain of about $64,000. (8) The states with the highest amount of appreciation were California and Hawaii with an average of about $140,000. Other red-hot states were Washington, Arizona, Utah, Colorado, and Nevada. The states with the lowest amount of average appreciation were Iowa at $17,000 and North Dakota at $19,000. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! I'd also like to recommend a new book called "The Wise Investor" by RealWealth co-founder Rich Fettke. He wrote the book as an entertaining way to share what he's learned about creating wealth both financially and personally. The protagonist is a man who realizes his

There's a lot of uncertainty in the economy right now as inflation pushes higher. The housing market is contributing to inflation with higher home prices, and now we're seeing higher mortgage rates. As potential homebuyers get priced out of the market, real estate investors see the need for housing as a big opportunity for 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. Institutional investors have been very busy this year expanding their portfolios of single-family rental homes. As reported by HousingWire, they've sponsored at least 10 SFR securitization deals worth almost $8 billion. (1) ATTOM Data Solutions' Rick Sharga says: The historically low inventory of homes to buy coupled with (rental) vacancy rates hovering around 2.5%, have positioned SFR owners for success in today's housing market." Strength of the Single-Family Rental Market The institutional deals highlight the strength of the single-family rental market, but it's the "mom and pop" investors who are the biggest beneficiaries because the single-family rental market is dominated by small investors. According to rentalhomecouncil.org, 99% of single-family rentals are owned by smaller investors and 90 percent of them own fewer than ten units. (2) But the Wall Street landlords are showing a lot of interest, and their share is growing. This trend is gaining momentum as potential homebuyers lose the battle against inflation, and the Fed tightens the belt on the money supply. The Fed's recent decision to increase short-term lending rates by a whopping 75 basis points is the Fed's latest attempt to slow a hot economy. It's the biggest rate hike we've seen since 1994 and will raise borrowing costs for adjustable rate mortgages and other short-term loans. Rising Mortgage Rates It's not directly tied to the popular fixed-rate mortgage, but will impact mortgages through a complex set of economic relationships. That includes nervousness among investors, bond yields and the 10-year Treasury. After more than a decade of low mortgage rates, the 30-year fixed-rate mortgage topped 6% last week. According to ATTOM, mortgage originations were down 18% from the Q4 of last year to Q1 of this year. Year-over-year, they were down 32%. The biggest reason for the mortgage downturn is a decrease in refinancing. ATTOM says just 1.45 million home loans were rolled into new mortgages during the first quarter. That's 22% lower than the end of last year and 46% lower than a year ago. According to Sharga: "The drop-ff in Q1 refinancing activity is no surprise with mortgage rates rising as rapidly as they have." Renting Cheaper than Buying Home prices are also keeping homebuyers at bay. According to John Burns Real Estate Consulting, it's now more costly to own a home than it is to rent one since the year 2000. The consulting group says it costs about $839 per month more to buy than to rent. (3) John Burns senior research manager, Danielle Nguyen, says: "With demand now shifting toward renting, home builders who were once reluctant to sell to rental home investors are now soliciting offers from investors." She says: "Strong demand from investors will provide additional support to today's home prices." SFR Opportunities for Investors As dire as it may sound to hear about higher mortgage rates and expensive homes, demand for single-family rentals remains strong, and that's attracting more institutional investors. MetLife Investment Management told HousingWire that: "MIM believes that institutional SFR ownership is likely to grow significantly over the next decade." It expects that share to grow from 2% where it is today to around 10% in the future. Much of that growth will come from the new build-to-rent trend that's taking shape. It isn't just the big landlords who are doing the build-to-rent thing. Although it's great that institutional investors might prefer to leave the existing home inventory to small investors and homebuyers, there are opportunities for small investors to own newly-built rentals. If you're a member of RealWealth, then you probably know that we work with with property teams who can provide that kind of rental unit to our members. If you'd like to know more about that, please go to newsforinvestors.com and sign up. It's free, and will give you access to our resources, including investment counselors and property teams. While you are there, you can also check for links on this topic in the show notes for this episode. Also, please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.housingwire.com/articles/as-rates-skyrocket-wall-street-single-family-rental-investors-see-opportunity/?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_medium=email&_hsmi=216674568&_hsenc=p2ANqtz-9kKz4UtawEjJ2FBXak6h5mP0nz8HU01QcfNmJN26CMLgu3kR8V-0LQbz_pxwqztwv6NKfgARrR6Fz2zghXhhq6CKy2Gg&utm_content=2166

Reporting rent payments to credit bureaus is growing in popularity to help tenants build credit. But it's not just something that helps tenants. According to the media website, Propmodo, it's also a better way to do business for landlords. And there are a growing number of companies offering this service to both tenants 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. Having a long history of on-time rent payments speaks well of a renter. That's something every landlord looks for during the screening process. But until more recently, the only option for passing that information along to the "next" landlord is by word of mouth – from one landlord to another who's checking references, typically by phone. For the renter, on-time rent payments will obviously keep the peace with a current landlord, and help with any phone calls from a new landlord, but it does little to improve a renter's credit score. Although renters can build credit from paying their other bills, rent hasn't been one of things reported to the big three credit agencies because landlords are not considered creditors. Technology-Based Solutions The arrival of technology-based solutions or "fintech" is changing the way this information is distributed. Just this week, a company called "Bilt Rewards" announced that it will offer a free rent reporting service for tenants who live in Bilt Alliance multi-family buildings. Bilt tenants have been able to earn points for paying their rent on time, and then use those points to pay for other things like travel or to help pay next month's rent. And now those tenants can also choose to have those rent payments reported to Experian, Equifax, and Transunion to help build their credit, which they need to possibly eventually buy a home. As Bilt says on its website: "Rent reporting can help build a credit history, increase the types of credit on your credit report, and may boost your credit score." (2) Rent Reporting is Valuable to Landlords This kind of information is also valuable to landlords to evaluate the likelihood that a future tenant will pay his or her rent. It even seems like a glaring omission that rent reporting has not been part of the credit reporting system, but as I mentioned, that's changing. There are a number of companies now offering the service. FrontLobby and RentRedi are two that come to mind, along with the one I previously mentioned, Bilt Rewards. Propmodo mentions a company called Piñata that also rewards tenants for making on-time payments. It's a New Jersey start-up with an app that provides currency to tenants with timely rent payments. That currency can then be used to buy things from prominent brands like Costco, Amazon, and Starbucks. Piñata also helps tenants build credit, and hopes to close the credit discrimination gap for renters. Propmodo says that the "lack" of rent reporting can be a source of frustration for renters. According to a report from Harvard's Joint Center for Housing Studies, almost 11 million renters spent more than 50% of their income on housing in 2018. That's a big chunk of a typical renter's income that doesn't build equity, and without contributing to their credit score, provides no additional financial benefit. Building Credit, Avoiding Delinquencies As reported by Propmodo, FrontLobby says that tenants have seen their credit scores jump more than 40 points "in a matter of months." And for landlords, it says they can "lower payment delinquencies by 36%." The Propmodo piece calls it a win-win for both tenants and landlords because "landlords and property management companies can make better screening decisions when they're deciding who to rent to. And, it says that "offering to report a tenant's rent payments to the credit bureaus is its own incentive to attract tenants." For tenants, it helps them build credit, which they might need if they ever want to become homeowners. Fannie Mae has been using data on rent payments in its underwriting process since last September. And Freddie Mac is reportedly looking into doing it as well. (3) Check for links in the show notes at newsforinvestors.com. And please check out Rich Fettke's new book, "The Wise Investor." It's a book that will help ground you and expand your horizons while teaching you about real estate, financial freedom, and the discovery of your better self. The kindle book is for sale on Amazon. The hard cover and audio versions are coming out in August but you can pre-order them now. You can also read more about the book here. Also, please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.propmodo.com/reporting-rent-to-credit-bureaus-is-better-for-tenants-and-landlords/ 2 -https://www.biltrewards.com/ 3 -https://www.nationalmortgagenews.com/news/rent-payment-reporting-program-launched-by-bilt-rewards

In this Real Estate News Brief for the week ending June 11th, 2022... inflation hits a 40-year high, demand grows for single family rentals, and a popular TV show inspires a Montana migration. 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 shows the highest rate of inflation since 1981. The Consumer Price Index was up 1% in May to an annual rate of 8.6%. It was 8.3% last month. The increase is mostly due to rising gas and food prices. If you strip those out, the core rate was up .6% to an annual rate of 6%, which was actually down slightly from 6.2%. (1) The report is setting off alarm bells. Financial experts are now anticipating a 75 basis point rate hike at the next Fed meeting in June, and further hikes in July and September. The talk so far has been more along the lines of two 50 basis point hikes in June and July, but as one wealth advisor told CNBC, this report was a "doozy." Tom Graff of Facet Wealth says: "The most concerning part of this report was its breadth. The monthly number wasn't driven by a few items. Most of the major categories actually accelerated price increases month-over-month." (2) As inflation fears grow, so do worries about recession. Now the Atlanta Fed is lowering its forecast for the second quarter from 1.3% to a gain of just .9%. (3) It's interesting to note that real estate accounted for almost 17% of the GDP last year. The National Association of Realtors says it was 16.9% of the GDP or about $3.9 billion. That's about $113,000 in total economic impact for each home sale. (4) The Memorial Day weekend may have contributed to a jump in jobless claims. MarketWatch says they were up 27,000 to a five-month high of 229,000. It calls them seasonal "quirks" due to the holiday and not layoffs. (5) Mortgage Rates After idling for a few weeks, the mortgage rate seesaw continues. Freddie Mac says the average 30-year fixed-rate mortgage was 14 basis points higher last week to 5.23%. The 15-year was up 6 points to 4.38%. (6) The average contracted rate of interest was higher. The Mortgage Bankers Association says the 30-year went from 5.33% to 5.40%. That corresponded to a 7% drop in purchase applications. Refinance loans were also down 6%. The MBA says mortgage demand dropped to its lowest level in 22 years. (7) Freddie Mac's deputy chief economist Len Kiefer said in a tweet that the "U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006." He said: "It hasn't shown up in many data series yet, but mortgage applications are pointing to a large decline over the summer." He also clarified that he expects home sales to slow down quite a bit over the summer, but doesn't expect them to "grind to a complete halt." (8) In other news making headlines... Pessimism Among Would-Be Homebuyers A new survey supports the idea of slower sales this summer. Fannie Mae's Home Purchasing Sentiment Index shows that almost 80% of the participants feel it's a bad time to buy a home right now. Almost as many people feel that mortgage rates will continue to march higher over the next year. (9) Fannie Mae expects a mild recession next year, but the agency says that inflation and rapidly rising short term interest rates could push us into a recession much sooner. Demand for Single-Family Rentals Big landlords are responding to a demand for single-family rentals. The National Association of Home Builders says that builders broke ground on 13,000 single-family rentals in the first quarter. That's a 63% increase from the first quarter of last year. (10) American Homes 4 Rent CEO, David Singelyn, told CNBC: "There are not enough quality homes for the number of American families." He says the quantity of inquiries, showings, and applications for new rental homes is "two to three times greater today than it was two years ago before the pandemic." TV Shows Drives Newcomers to Montana Montana is getting a lot of attention as a great place to live, thanks to Kevin Costner's TV show "Yellowstone." The show features the Dutton family and ranch-style living on large stretches of land with sweeping views of mountains and prairies. (11) Beartooth investment Group founder, Robert Keith, says his company has received influx of inquiries from all sorts of wealthy families who want to buy a ranch. He says: "They are looking to own really amazing large properties" like you see in the TV show. The show debuted in 2018 and has already pumped tens of millions of dollars into the Montana economy, but long-time Montana residents are worried it's attracting too many new residents and driving up home prices. The median home price was $500,000 before the pandemic. It's now almost $750,000. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! If you're worried abo

A Phoenix-based construction company isn't worried about the high price of lumber. It has replaced lumber with another building material that it claims is cheaper, more available, more resistant to natural disasters, and more energy efficient. 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. Amazing Building Material So what is this amazing building material? It's basically a combination of foam and cement in layers. It can be used on all parts of a home including walls, floors, and ceilings. And lowers the cost of building the home by as much as 10 to 50%. Strata International calls the product SABS which stands for Saebi Alternative Building System. Strata is a green structural engineering company and Amir Saebi (Sigh-EE-bee) is the Executive Operations Manager. (1) The process involves the cutting of foam slabs into smaller elements of the home design and then gluing them together with a foam adhesive to create a three-dimensional structure. That foam structure is then covered on both the inside and the outside with a thin layer of high-strength concrete. No Wood. No Nails. No Steel. No Nothing. Saebi told a local TV station: "Once the panels come together you have a monolithic system completely made out of foam." After that, he says: "We'll take the high-strength concrete and apply it to the exterior and interior and that's all the system uses. No wood. No nails. No steel. No nothing. It's just the foam and the SABS product which goes over it which is the high-strength concrete." (2) Saebi says it's so strong that you could drive an F150 truck onto a six-inch finished piece without cracking it. He also described the environmental qualities of the foam as "100% breathable, 100% liveable, FDA approved, and 100% recyclable." There's a chart on the website that shows how this foam can outperform other building materials when it comes to mother nature. (3) It says that houses made of this foam can withstand winds up to 260 miles per hour, making it highly resistant to hurricanes. It's also at the top of its class when it comes to earthquakes, mold resistance, and rodent resistance. It has a moderate reading for fires which is better than wood. Practical Solution for Green Construction Strata says the foam is a perfect solution for a building material that is more climate friendly, and the first practical solution for green construction because it checks so many boxes – from affordability to sustainability. It's also a better insulating material than wood, masonry and other building materials. It has a minimum R-value of 35 with an average R-value of 50 to 65. The minimum R-value alone is more than double the R-value of wood and masonry. The R-value of a building material indicates how well it resists heat. The higher the number, the higher the resistance. The foam is also good for soundproofing. Saebi says that energy efficiency is about double what you'd get from a home built of wood, and in places like Arizona, it can cut your AC bill in half. No Limits on Design He also emphasizes the design benefits of foam because you have no limits to the kind of shapes you can create. There are also fewer steps to the construction process. Building a home out of foam might require four kinds of sub-contractors while a wood home requires 11. The company has already built hundreds of foam buildings around the world, and is currently building a 6,000-square foot home out of foam in the Phoenix area. Saebi says the supply chain issues that have haunted builders for the last few years haven't impacted the availability of foam so foam prices haven't really hasn't increased. Strata first introduced its foam building material more than 20 years ago in 1999 so it's been around for a while. Saebi says with supply chain and climate change issues, it's now becoming more popular. Check for links in the show notes at newsforinvestors.com. Also, please remember to hit the subscribe button, and leave a review! You can also join our real estate investor network for free at newsforinvestors.com. That gives you access to the Investor Portal where you'll find information on rental markets and sample property pro-formas. You can also connect with our experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.strataus.com/media 2 -https://www.fox10phoenix.com/news/as-cost-to-build-home-rises-phoenix-area-company-using-new-material-to-build-houses 3 -https://www.strataus.com/_files/ugd/077c93_088198965db54c829afee29a01d596f8.pdf

In this Real Estate News Brief for the week ending June 4th, 2022... what's being done about inflation, how inflation is impacting homebuyers, and why lumber prices are actually falling. 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 lots of talk about inflation. President Biden launched a new effort last week to tackle inflation. As reported by the Washington Post, he was apparently fuming to aides that not enough was being done to control inflation. That turned into a flurry of activity to get the ball rolling and send a positive message to the American people. He met with both Federal Reserve Chief Jerome Powell and Former Fed Chief Janet Yellen in the Oval Office, and said in a public address that fighting inflation was his top economic priority. (1) President Biden also published an op-ed piece for the Wall Street Journal outlining a three-part strategy for fighting inflation. The first part involves the Federal Reserve's responsibility for controlling inflation, which it's now doing with aggressive rate hikes. Biden says he won't meddle with that, but for part two, he says he will do what he can, or with the help of Congress, "to make things more affordable for families." That includes an effort to lower prices for gas, utilities, prescription drugs, and other everyday goods. The third part involves deficit reduction. The Congressional Budget Office projected the deficit will fall by $1.7 trillion this year. Biden wants to see even more of a reduction with what he calls "common-sense" tax reforms. (2) *Ironically, what was not mentioned was the Fed's stimulus, and the trillions of dollars that were created over the past two years that increased the money supply by nearly 50%. Additionally, the Fed had continued to buy Mortgage Backed Securities to support the housing market, until spring of 2022, when home prices had already increased by 20%. So in my opinion, the Federal Reserve together with the US government contributed to the inflation they are now trying to combat with rapidly rising rates and Quantitative Tightening. If you'd like to hear more about my opinions on how we got here, listen to the new podcast, On the Market, which is sponsored by FundRise. I am a regular guest expert on that show, and we go into detail on what's behind the headlines. There's a bit of good news about Social Security thanks to the strong job market recovery. The Treasury Department says that Social Security benefits are now fully funded through 2034. That's one year longer than previous estimates. It also says the disability insurance program has enough funds to pay full benefits for the next 75 years, through 2097. Last year, Treasury officials said that funds would be gone by 2057. (6) Unemployment claims fell for a second week in a row. There were just 200,000 initial claims, and 1.31 million continuing claims. Continuing claims are the lowest since 1969. (7) The unemployment rate in May was at 3.6%. (8) Now to the housing market: Construction spending was .2% higher in April, mostly due to money spent on residential construction. It was up .5% for single-family homes, .8% for multi-family buildings, and down for non-residential private and public construction. (9) *The latest Case-Shiller home price report shows that prices hit a new record high in April. The 20-city index was up 3.1% in April for a yearly rate of 21.2%. Keep in mind that April closings probably had rate locks in March, before interest rates increased two points.(10) Mortgage Rates Mortgage rates didn't move much this last week. Freddie Mac says the average 30-year fixed rate mortgage was down just one basis point, to 5.09%. The 15-year was up one point to 4.32%. (11) Purchase applications are now about 14% lower than they were a year ago, thanks to higher rates. The Mortgage Bankers Association says the average contract rate for a 30-year with a 20% down payment was 5.33% last week. (12) In other news making headlines... Inflation Impact on Homebuyer's Budget Inflation is taking a huge bite out of the homebuyer's budget. According to the National Association of Realtors, homebuyers have to chop $40,000 off their budget for a home because they are paying more for everything else. (13) NAR says the average consumer is paying about $500 more per month compared to a year ago. That's an extra $6,000 a year. NAR'S chief economist Lawrence Yun expects a 10% decrease in housing demand thanks to higher prices, although he still expects a 5% increase in home prices because of the tight inventory. Lumber Prices Tumble Lumber prices are coming back down to earth. The National Association of Homebuilders says they fell 12% this last week to their lowest level so far this year. (14) The Wall Street Journal reports that prices are coming down because the housing market is cooling off a bit. It says that orders fo

In this Real Estate News Brief for the week ending May 28th, 2022... you'll hear about the "condo comeback," a new wildfire risk assessment tool for your properties, and which states can save you the most money on taxes. 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 bit of good news about inflation. The Federal Reserve's preferred method for tracking inflation shows that price growth could be slowing down. The Personal Consumption Index or PCE rose only .2% in April. That brings the annual rate down from 6.6% in March to 6.3% in April. As reported by MarketWatch, it was the first time we've seen a pullback in a year-and-a-half. (1) The PCE is considered to be more accurate than the Consumer Price Index or CPI because it factors in additional criteria such as consumers substituting expensive products for cheaper ones. The latest CPI shows an annual inflation rate of 8.3%. The Fed released the minutes of its last meeting which show that most central bank officials are in favor of two more half-percent rate hikes. Some officials believe that inflation has already peaked, but the minutes show that Fed officials feel that two more rate hikes are likely. The bank raised the Federal Funds rate by a half a percent (or 50 basis points) at the last meeting to a range of three-quarters to one percent. Some Wall Street analysts expect the Fed to go as high as 3% by the end of the year. (2) Meanwhile, unemployment claims went down which is a sign that the labor market is still strong. There were about 8,000 fewer new claims last week, for a total of 210,000. Most companies have positions they are trying to fill, and MarketWatch reports that only a "smattering" of companies have reduced their hiring plans or announced layoffs. The number of continuing claims rose slightly. There are about 1.35 million people collecting unemployment benefits. (3) New home sales took a bit of a nose dive in April. They were down 16.6% to an annual rate of 591,000. It's the fourth month in a row that they've gone down, thanks to higher home prices and rising mortgage rates. The median price of a home is now the highest on record at $435,000. The average price is even higher, at $570,300 which means there are more homes selling for that higher price point. The slowdown in sales has boosted inventory. It's now at a 14-year high of 444,000. (4) Existing home sales are also down for a sixth month in a row. The National Association of Realtors says that pending sales dropped to 3.9% in April, which is the slowest they've been in ten years. Compared to a year ago, they were down 9.1%. NAR's chief economist, Lawrence Yun, says higher interest rates have increased the cost of buying a home by more than 25%, and higher home prices have added another 15% on top of that. He's predicting that home price growth will slow down to about 5% by the end of the year, but that home prices are "in no danger of a meaningful decline" because of the housing shortage. (5) Mortgage Rates Mortgage rate pain did ease up a little this last week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 15 basis points to 5.1%. The 15-year was down 12 points to 4.31%. Lower rates are the result of the housing market slowdown. (6) In other news making headlines... Demand Rising for Condos Builders are responding to a new demand for condominiums. The National Association of Home Builders reports 11,000 starts for condominium units in the first quarter of this year. That's the highest level of condo construction since the third quarter of 2008. (7) Redfin manager, Chance Glover, in Boston told Realtor.com: "The condo market has bounced back. People are no longer afraid to live downtown, close to the crowds." She says: "Rising prices are pushing single-family homes out of reach for a lot of buyers, so condos are affordable in comparison." (8) New Risk Factor Tool for Wildfires The foundation that developed a tool to determine a property's risk of flooding just introduced one for wildfires. The First Street Foundation said in a press release that more than 30 million properties across the U.S. have at least a 1% chance of wildfire over 30 years because of climate change. (9) The Foundation's new tool helps individual homeowners, buyers, and renters understand the wildfire risk for specific properties. Like you can with the flood risk tool, you can put your address into the tool and get details on the risk of a wildfire. That includes a risk factor on a scale of one to ten, the extent of potential damage, and the impact of recent nearby wildfires. (10) States with the Lowest Taxes Do you own property in a high tax or a low tax state? There's a new state ranking from Credit Karma that compares income tax, sales tax, and property tax for all 50 states. When you combine the impact of all three, the five states with the low

It's no secret that energy costs have been soaring. That goes for the money we spend at the pump, and the money we spend to heat and cool our homes. Homeowners can do things to increase efficiency, but renters typically get whatever comes with the unit and without knowing the cost for utilities before they move in. One group hopes to change that scenario with research that shows how energy labels in rental listings can be a win-win for both tenants and 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. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Researchers with the "American Council for an Energy-Efficient Economy" conducted a survey recently to find out how energy labels would impact a rental applicant's preferences. They enlisted the help of about 2500 people in different parts of the country who used a fake listing website to search for rentals. Survey on Tenant Preferences They were split into seven groups. Six of the groups were able to search through listings with energy cost information that was displayed in different formats. The seventh group was a control group and looked at listings without energy labels. Researchers say that participants given information about the cost of utilities were 21% more likely to choose energy efficient units. But the results also varied according to the visual presentation of that information. They say that groups who received the information within a "context" were more likely to respond favorably to the energy cost rating. For example, listings that displayed estimated costs with a minimum and maximum range of typical costs for the area were better at attracting users than the ones with just a figure for estimated costs. There was also a difference among various sub-groups of tenants depending on what part of the country they were in and their ages. Sub-groups that preferred higher energy efficiency lived in the hottest and coolest climates, which makes sense given the need for more heating and cooling. Age seemed to impact the results with people younger than 45 being a little more interested in the energy efficient units. One curious result was that apartment renters were more interested in energy efficiency than people renting single-family homes. These sub-groups were also willing to pay more in rent, typically within the 1 to 2% range. Energy Labels Good for Tenants & Landlords Researchers feel the information is important for landlords who'd like to attract higher-quality tenants. And if energy efficient units command higher rents while reducing what tenants pay for utilities, that's a win-win for tenants and landlords, and, of course, another "win" for the environment. Researchers suggest that landlords may want to prioritize energy upgrades when they are drawing up their list of improvements, and that local regulators may want to consider policies that require this kind of information in rental listings Currently, there are no requirements anywhere in the country for the display of this information. But there's growing concern about energy use and summer power outages. We're already seeing headlines about how dire the situation might be this summer. Energy Emergencies Expected This Summer Forecasters are expecting a hotter-than-normal summer and regulators are warning about potential energy emergencies when people crank up their air conditioners and large appliances. Just last week, power grid regulator NERC, which stands for North American Electric Reliability Corporation, warned that large portions of the country will be at risk of power outages in the coming months. The Upper Midwest faces the highest risk of an energy emergency. It lost about 2% of its power generating capacity because of recently retired power plants. A key transmission line is also being repaired. There's also an elevated risk across the entire Western half of the U.S. thanks to high temperatures, drought, and wildfires. While extreme heat results in more use of electricity, it also increases the risk of mechanical failures at power plants. Drought reduces output at hydroelectric power plants. Wildfires can destroy major power lines, and smoke reduces power generation at solar facilities. So there are several issues at play across the West. NERC's John Moura told CBS MoneyWatch: "We've been doing (grid assessments) for close to 30 years. This is probably one of the grimmest pictures we've painted in a while." He says: "As extreme weather continues to plague us, we've really noticed that extreme weather doesn't really mean rare weather. (We're seeing) the extreme happening more often." What this all means is that property owners of all shapes and sizes will be asked to reduce their energy consumption. When you own rental property, it might be easy to overlook the energy needs of the tenants, but there's a growing trend for energy efficiency, an

The Biden administration announced an ambitious new goal to close the affordable housing gap in just five years. The plan includes financial incentives to build more housing, along with changes to zoning and land use regulations to potentially make it easier to create new housing. It also includes new financing policies for things like accessory dwelling units and manufactured homes, and solutions for the supply chain crunch that's making it difficult for builders and renovators. 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 White House released details of its Biden-Harris Administration Housing Supply Action Plan on May 16th. (1) It falls under President Biden's effort to tackle inflation as a top priority and the need to address housing costs. According to the Consumer Price Index, housing accounts for about 30% of the prices increases we're seeing today. Housing Supply Action Plan With this new plan, the administration hopes to create and/or preserve hundreds of thousands of affordable housing units. The government would not build any homes directly. It would all be done with the help of government policies, financing, and incentives for the private sector. This plan is also in addition to a previous one announced in September of last year, to create 100,000 homes in three years. There are five main categories to the Biden-Harris plan: 1 - The first category provides incentives for cities and districts to loosen zoning and land-use rules. Districts that do this will rank higher during the competitive process for securing federal grants. 2 - The second category includes new financing programs for the creation or preservation of small-scale housing. That includes ADUs, manufactured homes, and small multi-family buildings. 3 - Third on the list is a plan to expand and improve existing forms of federal financing. That includes more access to so-called "construction to permanent loans," promoting the use of surplus COVID-19 recovery funds for the creation of affordable housing, and reforms to the Low Income Housing Tax Credit which would benefit investors who create affordable housing. 4 - Fourth, is a plan to give priority to homebuyers who plan to live in the homes and non-profits when disposing of federally-owned land and homes, including FHA foreclosures. The idea is to steer these deals away from large institutional investors. 5 - And last, to work with the private sector to fix supply chain issues. The goal is to get supplies moving again and allow builders to finish construction on the most new homes this year than in any year since 2006. Some of the provisions in this plan will also rely on approval from Congress, which is never a given. But some steps could also be implemented right away, including a policy at the Department of Transportation that grands higher scores during the federal grant process to districts that encourage more housing density. The Federal Housing Administration and the Federal Housing Financing Agency can also help lenders launch and expand financing programs for the construction of ADUs, manufactured homes, and the renovation of single-family homes. The FHA will also be investigating the Fannie Mae purchase of construction-to-permanent multi-family loans which would help fast track the development of multi-families, and lower the cost for builders. Affordable Housing Crisis According to Moody's Analytics, we need at least 1.5 million more homes to meet current demand. As you know, the housing gap grew during the Great Recession and was made worse by the pandemic. Because of this massive shortfall, housing expenses have gone sky-high, making homeownership unaffordable for many Americans. That's creating a bigger demand for rentals, which is great for investors, but rising rents are also becoming more of a burden on tenants. As reported by CNN, almost eight million Americans are spending at least half of their monthly income on housing. Anything over 30% is considered a burden. (2) CEO Buzz Roberts of the National Association of Affordable Housing Lenders says that today's homebuyers are really feeling the impact of inflation. He told HousingWire: "On the nightly news you hear about gas and groceries, and while those things are critically important, when trying to buy a house, inflation is really daunting." He says: "If you get a higher mortgage rate, there's still some change you can refinance out, but the price (of the home) is baked in." (3) Urgent and Comprehensive Action Needed The National Association of Realtors is supporting this plan. NAR President Leslie Rouda Smith says that "urgent" and "comprehensive" action is needed to tackle the housing shortage problem. She says: "For too long, land use restrictions have driven up the cost of housing for too many." (4) Support for the creation of ADUs and manufactured homes is a big part of the plan, and a potential opportunity for investors.

In this Real Estate News Brief for the week ending May 21st, 2022… forbearance claims hit a two-year low, rent levels are setting new records, and a new list of the "best places to live". 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, and comments from Fed Chief Jerome Powell about the central bank's resolve to fight inflation. He told the Wall Street Journal that "restoring price stability is… something we have to do" and, he says, "there could be some pain involved." (1) The Fed approved a 50 basis point increase for the federal funds rate at its last meeting. And, it expects to do the same at the next two meetings. The short-term rate is now within a range of .75 to 1%. Raising it another 100 basis points will bring it to 1.75 to 2%. Powell says it's still possible to avoid a recession, but he's now describing the process as a "soft-ISH" landing. (2) He hopes to control inflation without a big impact on the labor market. He says, if there is a recession he hopes it will be "short and not all that deep." Many economists are lowering their economic forecasts because of inflation and higher interest rates. That includes Fannie Mae's chief economist Doug Duncan. He says: "Financial conditions have tightened significantly and the economy is slowing faster than previously expected." Fannie Mae now expects a full-year GDP of 1.3%. That's .8% lower than the previous forecast. The Fannie Mae group is predicting a modest recession in the second half of next year 2023. (3) Jobless claims hit a four-month high last week. There were 218,000 initial claims, which is 21,000 more than the week before. The number of people collecting benefits is still extremely low. 25,000 people dropped off that list last week, for a total of 1.32 million. That's the lowest number of claims since 1969. Economists are watching unemployment numbers closely because they typically rise before a recession. (4) New home construction hit a speed bump for the second month in a row. Housing starts were .2% lower to an annual pace of 1.72 million. Economists blame rising mortgage rates and higher home prices for the slowdown. Permits were down 3.2% to an annual rate of 1.82 million. A drop in single-family construction brought the numbers down. Starts on those projects were down more than 7% while multi-family starts were higher by almost 17%. Builders have shifted their focus to multi-family rental units as they try to meet the demand for housing. (5) Existing home sales were down in April. The National Association of Realtors says they fell 2.4% to a seasonally adjusted annual rate of 5.61 million. If you compare these numbers to a year ago, sales were down almost 6%. As reported by MarketWatch, this is the third straight month that sales have declined. Currently, there's a 2.2 month supply of homes on the market. (6) Mortgage Rates Mortgage rates came down slightly last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 5 basis points to 5.25%. The 15-year was 4.43%. (7) In other news making headlines... Forbearance Claims Hit 2-Year Low The number of home loans in forbearance has now dropped below 1%. According to the Mortgage Bankers Association, forbearance claims dropped from 1.05% in March to just .94% in April. That's about 470,000 loans. The MBA says this is the lowest level since June of 2020, right before the pandemic left many homeowners without a paycheck, and without means to pay their loans. (8) The five states with the highest number of loans in forbearance include: Louisiana, Mississippi, West Virginia, New York, and Oklahoma. The five states with the lowest number of loans in forbearance include: Idaho, Washington, Colorado, Utah, and Oregon. Rent Levels Are Setting New Records Scorching hot demand for rentals is pushing apartment rents higher once again. Realtor.com says the U.S. median rental price hit a new high of $1,827 in April. The year-over-year increase for a studio apartment is 17.2%. For a one-bedroom, it's 15.6%. And, for a two-bedroom, it's 15.9%. (9) Orlando posted the largest rent gains in April at 32.9%. Tampa was next at 27.8%. San Diego, Las Vegas, and Miami were also among the top five rent gainers. "Best Place to Live" in 2022 When it comes to a great rental market, it doesn't hurt to score a top spot on a list of "best places to live." And that's what you'll find on the latest U.S. News & World Report list which places Huntsville, Alabama at the top. The report analyzes several metrics including affordability, quality of life, health care, employment, and crime. (10) Editor Devon Thorsby says: "Much of the shakeup at the top of this year's ranking is a result of changing preferences." He says: "People moving across the country today are putting more emphasis on affordability and quality of life than on the job market." If you're curious about t

As the country deals with high inflation in food, energy, and housing, many real estate investors are pivoting to keep up with changing market dynamics. Smart investors can thrive in challenging times, if they know where to look. 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. I recently interviewed John Chang on my other podcast, The Real Wealth Show. John is the National Director of Research at Marcus & Millichap, and he offered some very good insights that I wanted to summarize here on Real Estate News for Investors. Marcus & Millichap's John Chang Just to give you some background on John, he leads a team of real estate research professionals and is responsible for the production of the firm's vast array of commercial real estate publications, tools and services. Under his leadership, Marcus & Millichap has become a leading source of market analysis, insight and forecasting, and the firm's research is regularly quoted throughout the industry and in mainstream business media. To summarize, John is well-respected in his field. During his recent interview, he explained how good investors had it last year, and what they will be up against this year. He says last year was off the charts for commercial real estate. Transaction volume was up about 30% higher than the previous peak, and the dollar volume was up 45%. He says there were more deals, and many of them were also bigger deals, which is why there was a surge in dollar volume. Changing Real Estate Environment But as prices and interest rates rise, what are we starting to see now? At the time of this podcast, the overnight lending rate was up 75 basis points. That's triggering the beginning of a slowdown, but John says we haven't really felt the impact yet, because many of the transactions that are closing today were locked in 30, 60, or 90 days ago. He doesn't think we'll see much of a change during the first half of 2022, and in the second half, he expects a little bit of a slowdown, but nothing dramatic. He says, even with a few more rate hikes, there won't be a huge impact on most real estate investors., because there's a lot of capital out there. After all, the Federal Reserve increasing the amount of that's circulating by nearly 50% in just two years time. This is unprecedented. As those dollars circulate, investors are looking for places to put that money as a hedge against this inflation. There are also tax benefits that investors will be trying to capitalize on. So he expects investors to keep moving forward with their plans, but hopefully with more caution. The "Value Add Mentality" John told us a little story about his Dad during the interview. He said that his Dad bought his first rental property in 1971. He took out a loan at 6.5% which is higher than what we are facing right now. John's Dad still owns that property today, and John says the reason it has worked out so well is because of something called "value add." His Dad continued to add value to that property so that the high interest rate didn't matter that much. And over time, it's been a worthwhile investment. John says that smart investors have a "value add mentality." They will research and analyze a property, and figure out a way to improve it with better management or upgrades or conversions. This mentality is something that new investors may not have developed yet because it's been so easy in recent years. Analysis hasn't really been necessary. As John put it: "Investors have gotten lazy… because interest rates have been so low you can just buy into a deal and it cash flows right away. You don't have to work as hard." But he says that we are now coming to a time when "investors have to roll up their sleeves, understand the intrinsic value of the property… what they can do differently than the previous owner, and then buy those properties." Sophisticated investors don't see high interest rates as a game changer. Instead, they look for ways to add value to the property to eliminate that expense. Even properties with a negative cap rate can be good for investors, so long as there's a way to add value. John points out that the U.S. economy is the strongest in the world. People are working and spending money. Real estate is doing well. There are still supply chain issues to deal with, but when it comes to construction, the winners will be the builders with more experience and connections. This is important for investors also, to work with people who are connected. Successful investors will need to choose their properties and their partners carefully. Where Are the Deals Now? As for where investors will find deals in the commercial real estate space, John had several ideas. He mentioned multi-family buildings in smaller cities as a possibility, along with certain types of hotels, although hotel ownership also needs a special skill set. Also, he likes suburban office space in areas where people are moving,

In this Real Estate News Brief for the week ending May 14th, 2022… why lumber prices are falling, what the FHA is doing to discourage investors, and the new Google mapping tool that could help house hunters. 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. Inflation appeared to slow down a bit last month. The government reported a slight decline in the Consumer Price Index from an annual rate of 8.5% in March to 8.3% in April. But that's coming off a 40-year high, so we haven't come down much. Plus, the so-called "core rate of inflation" - which omits prices for food and gas - was .6% higher. That was a disappointment on Wall Street because analysts had forecast a lower .4% increase. (1) As reported by MarketWatch, many economists expect inflation to slow down, but they say it will probably take a while for that to happen. Supply chain issues and the labor shortage are two big reasons that prices keep rising. The decline was also not enough to put consumer minds at ease. The University of Michigan says its consumer sentiment index fell to a ten-year low as of this month. It went from a reading of 65.2 in April to 59.1. A survey shows that most Americans expect overall inflation to remain at the 5.4% level for the next year and at 3% for the next five years. (2) Mortgage Rates Mortgage rates also crept a little higher last week. Freddie Mac says the 30-year fixed-rate mortgage rose 3 basis points to an average of 5.3%. The 15-year was down 4 points to 4.48%. (3) The mortgage company says that many homebuyers are continuing with their plans but are paying about one third more per month than they would have a year ago. In other news making headlines… Builders Getting a Break on Lumber Prices Lumber prices are headed lower. They fell below $800 per thousand board feet last week. That's about 30% lower than they were at the beginning of the year, but they are still much higher than they have been historically. The National Home Builders Association says they've been so high that homes were $18,000 more expensive than they were in previous years, just because of high lumber prices. (4) A recent survey by John Burns Real Estate Consulting shows that prices may be coming down a little because of softening demand for entry-level homes. And, the COO of Sherwood Lumber, Kyle Little, told Insider: "We expect prices in the long term to be challenged with the affordability and rising interest rate headwinds." Landlords Lose in Appeal to CA Supreme Court The California Supreme Court rejected a request by landlords to review a lower court ruling that impacts the Costa-Hawkins Rental Housing Act. If you haven't heard of Costa-Hawkins, it's legislation enacted in 1995 that prevents California cities from imposing rent control on single-family homes, condominiums, and residential properties built after 1995. (5) There was concern that San Francisco landlords were circumventing eviction laws by raising rents so high that tenants would move out. The city called them "bad faith" rent increases that were used to evict tenants. The city then passed an ordinance in 2019 to prevent that from happening. It included a way to compare rent increases to market rates, and to check if there had been a recent eviction attempt. Landlords sued, but lost their case in lower courts. In 2020, a Superior Court judge said: "Costa-Hawkins does not protect a landlord's right to use a pretextual rent increase to avoid lawfully imposed local eviction restrictions." The high court's decision last week, allows the lower court ruling to stand. FHA Gives Owner-Occupants First Dibs on Foreclosures The Federal Housing Administration will make investors wait their turn, for a look at foreclosed properties. The FHA announced that owner occupant buyers, government entities, and HUD-approved nonprofits will get first dibs during a 30-day exclusive time period. It will also provide time for buyers to get a loan if they need one. (6) The FHA says it's doing this to support a goal to reduce the number of homes that investors are buying and turning into rentals, and to help people who want to become homeowners. Buyers must provide a signed statement saying they intend to live in the home. They also have 15 days to back out of a deal if they get "buyer's remorse." Google Street View Get "Immersive" Google is adding a new feature to its mapping software that will help house hunters. It combines satellite and street view images so that users can fly over an area and then drop down to street level to take a closer look. Some people say the aerial view looks like you're flying over a property with a drone. Google calls it an "immersive view." (7) It's being introduced in New York and Los Angeles. Google plans to expand soon to new areas. That's it for today. Check the show notes for links. And please remember to hit the subscrib

Dealing with sea level rise along the California coast is not going to be easy. One of the options that cities are encouraged to consider is something called "managed retreat." In a nutshell, that's when homes are moved away from the coast as it crumbles toward the sea. With so many expensive California homes perched on oceanside cliffs, the idea has become very controversial. There's even debate over the use of the term "managed retreat." (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. Managed retreat is a concept that's been around for a while. It's been used after natural disasters that have flooded whole communities. As reported by the SF Chronicle, The town of Soldiers Grove, Wisconsin, began relocating about 600 homes in 1979, after the Kickapoo River had flooded 25 times. It cost more than $27 million in federal, state, and local funds to buy new land and move 70 buildings, including 24 homes. "Managed Retreat" to Fight Rising Sea Levels Now, with increased concern about rising sea levels because of climate change, there's been more discussion about how to deal with it, and "managed retreat" is one of the options. But it's not being embraced by everyone. Managed retreat is something that goes against the desirability and value of oceanside real estate. As the Chronicle reports, it "represents a radical departure from decades of coastal development philosophy and runs counter to our proclivity to build houses and cities up against the ocean." And now cities along the shore have a tremendous challenge to deal with. As UC Santa Cruz professor, Gary Griggs, puts it: "Dealing with sea level rise and (cliff) retreat… is the biggest challenge that human civilization may ever have to face." The Cost of California Sea Level Rise In a 2019 study that was published in the journal Scientific Reports, researchers estimated that sea level rise along California's 1,271 mile-long coast could negatively impact $150 billion in property and 600,000 people. Two thirds of the impact is expected to hit the San Francisco Bay Area. But the same study predicts substantial erosion in Southern California over the next 80 years, and the disappearance of 67% of its beaches. California has already tried to fight erosion with other less aggressive measures such as seawalls, the reinforcing of cliffs, and the building of levees and jetties. Professor Griggs says the state has used these methods to protect about 10% of the coastline, but they are expensive and they don't last forever. They need maintenance and updating in the race to keep ahead of climate change. In some places, sand has been added to help keep the ocean at bay. The city of Santa Cruz has been doing this for decades. The Chronicle reports that Santa Cruz has dumped additional sand onto beaches 58 times since 1965. The price tag? Almost $18 million. Pacifica's Crumbling Cliff and Lost Homes One well-known example of the need for the relocation of homes has made headlines in San Mateo County. Winter storms in 2010 and 2015 caused so much damage to the cliff along Esplanade Drive in Pacific, the city was forced to condemn, purchase, and demolish several homes and apartment complexes. But even in a situation like this, it is not easy to tell people they must relocate because homes are at risk of falling into the sea. In 2015, the Coastal Commission asked cities to study how they would deal with sea level rise. Pacifica considered the use of managed retreat but after feedback from the community, rejected it. The city council said that it did not align with the city's goals or the desires of the residents. SF State economist Philip King told the Chronicle: "When you ask people to leave their homes, even if you could fully compensate them 100% economically, you still would be pulling them away from their community." He says: "It's an issue we're going to have to face in California." The Term "Managed Retreat" Conveys "Defeat" The term "managed retreat" also sounds too much like "defeat" for some people. An article in Slate suggests changing the term to something more obscure like "managed realignment" or "planned relocation." Or maybe something like "aggressive resilience" or "strategic advance" which sound more proactive. (2) One city that's embracing the idea of managed retreat is the city of Marina in Monterey County. Officials there have created a plan that allows for some amount of property relocation. That includes support from the owner of a beach resort who will have to move some buildings. One of the co-authors of a UC Santa Cruz paper on Marina said in the report: "So there are cases in which private property owners have seen the writing on the wall and they know that they're not going to be able to constantly rebuild their infrastructure after flooding and erosion. They are on board with the plan, and they want to help preserve the community." (3) You can read more about this t

The Real Estate News Brief; Fed's Rate Hike Plan, Record Home Price Growth, Real Estate Career Surge In this Real Estate News Brief for the week ending May 7th, 2022... the Fed fights inflation with rate hike, home prices hit new record high, and the popularity of a career in real estate. 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 words from the central bank that touched off a dramatic roller coaster of gains and losses on Wall Street. Fed Chief Jerome Powell sat down with the press for an hour on Wednesday after a decision by Fed officials to raise the Federal Funds rate by 50 basis points. Powell said that inflation is too high but essentially nixed the idea of a 75 basis point rate hike. He also suggested the possibility of two more 50-basis point rate hikes during the next two meetings. (1) His comments about shelving a more aggressive rate hike plan triggered a huge stock rally with the Dow gaining at least 900 points. But the exuberance didn't last long. Stocks fell harder on Thursday than they flew higher on Wednesday, and the losses continued on Friday. So there's still plenty of uncertainty about where our economy is headed. But Powell's comments were encouraging. Among his comments: "We need to do everything we can to restore stable prices as quickly and effectively as we can. We think we have a good chance to do it without a significant increase in unemployment or a really sharp slowdown." (2) So how do the rate hikes affect consumers and investors? They are directly linked to higher rates for credit cards, student loans, car loans, and adjustable-rate mortgages. They will also influence mortgage rates, although they are not directly linked. On a positive note: higher mortgage rates along with high home prices are expected to result in a cooler and more normal housing market. But how high will mortgage rates go? Lending Tree's senior economic analyst, Jacob Channel, is predicting that the 30-year fixed-rate loan will hit 6% by the end of the year. (3) I think it will hit 7%. There were 200,000 initial jobless claims last week which was an increase of 19,000 from the week before. It was the biggest weekly increase since almost a year ago, but continuing claims decreased by the same amount, but they remain at their lowest level since early 1970, at 1.38 million. (4) U.S. companies also added almost a quarter million new jobs in April, but there are still far too few workers to fill all the open positions. In March, there were a record 11.5 million jobs that needed filling. The unemployment rate is currently at 3.6% which is slightly higher than a 54-year low. (5) (6) Construction spending was slow in March, because of a drop in non-residential spending. Money spent on all kinds of residential construction was up 1%. That's mostly due to a 1.3% increase in single-family home construction that was offset by a drop in spending on multi-families. (7) Mortgage Rates Mortgage rates moved higher again this last week. Freddie Mac says the 30-year fixed-rate mortgage was up 17 basis points to 5.27%. That's the highest it's been since 2009. The 15-year was up 12 basis points to 4.52%. (8) The Mortgage Daily News says the average 30-year was even higher, at 5.55%. It also warned that home affordability is close to the worst it's ever been. At the start of the pandemic, 6% of U.S. housing markets were less affordable than long-term levels. That percentage is now up to 95%. (9) In other news making headlines… Home Price Growth Hits Record High The latest report from CoreLogic is out on home price growth in March. According to this report, it was up a record 20.9% year-over-year. If that number isn't impressive enough, CoreLogic says the March increase was the 122nd month in a row that home prices have gone up. (10) Chief economist Frank Nothaft says when you combine home price growth with higher interest rates, the monthly principal and interest payment on a home is now 50% higher than it was a year ago. Florida was at the top of the list for home price gains. They are up 31.4% year-over-year. Arizona was second followed by New York and Washington, D.C. People Switching to Real Estate Careers The hot real estate market is attracting more than just home buyers. A lot of people are quitting their jobs for a career in real estate. According to the New York Times, there was a 60% increase in the number of people who started working in real estate during the pandemic - from 2020 to 2021. (11) Coldwell Banker Real Estate CEO Ryan Gorman says that many people are exploring self-employment options, and with real estate, the sky is the limit. He says: "They've realized they can get out of it what they put into it" and that could mean a six-figure paycheck. But those expectations could be unrealistic. As realtor.com reports, most real estate agents don't make six figure

The Supreme Court has refused to step into the battle over the cap on SALT deductions. Several states sued to lift the cap on state and local tax deductions but the high court refused to hear the case. That leaves the matter up to Congress which hasn't produced results so far, or to the states which in some cases have offered a work-around. 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 $10,000 cap on SALT deductions was one of the most controversial parts of the 2017 tax bill. Those deductions cover state sales, income, and property tax. Once upon a time, they were unlimited. The Tax Cut and Jobs Act or TCJA was passed by a Republican-controlled Congress under President Trump and provided $1.5 trillion in tax cuts. (1) The low cap on the SALT deduction helped offset that lost tax revenue, along with a lower cap on the mortgage interest deduction. A higher individual tax deduction was also offered as partial compensation for the loss of those tax-saving strategies. SALT Cap Hit "Blue" States the Hardest The SALT deduction hit some states harder than others, particularly those with high priced homes and high tax rates. They were also states that were mostly "blue" or Democratic. New York is one of those states. As reported by the New York Times, it was estimated that the cap would force New York taxpayers to pay an additional $121 billion in federal taxes from 2018 through 2025, when the provision expires. (2) New York led the legal battle against the cap by filing a lawsuit in 2019. The states of Maryland, Connecticut, and New Jersey also joined the lawsuit. The case was dismissed by a District Court in New York, and was then dismissed on appeal. Appeals Court Ruling on SALT The appeals court ruling found that Congress had the power to impose the SALT cap. In the ruling it wrote: "It is obviously true that members of Congress were aware that the SALT deduction cap would adversely affect some states more than others. But the SALT deduction cap is not unlike the countless federal laws whose benefits and burdens are unevenly distributed across the country." A few days ago, the case made its way to the Supreme Court but the high court rejected the case which leaves the rule intact until the 2025 expiration – unless it is modified or extended. Democrats claim the 2017 law is an unconstitutional infringement on their sovereignty by Republicans who were targeting blue states. And, New York Governor Kathy Hochul has expressed disappointment with the Supreme Court decision. She wants Democrats in Congress to undo what she calls "an economic attack" on middle-class families by restoring the SALT deduction. Debate Over the SALT Deduction There is debate on whether it should be restored, even among Democrats. As reported by the Times, some of the more progressive Democrats in Congress feel that getting rid of the cap would only benefit wealthy Americans, and not the middle-class. Moderate Democrats would like the cap scrapped for the benefit of their wealthier constituents. There's also another issue involved with scrapping the SALT cap. In addition to imposing the cap, the 2017 tax bill eliminated two other provisions that helped moderate SALT deductions – namely, the individual alternative minimum tax or AMT and the PEASE limitation. If the SALT cap is lifted without reinstating those two provisions, the value of the tax deductions would be much higher than they were prior to the 2017 tax bill. According to the Tax Foundation, the Pease limitation capped deductions at 80%, including SALT deductions, for high-income taxpayers. If the alternative minimum tax applies to a taxpayer, the SALT deduction is eliminated altogether. (3) The Tax Foundation says that repealing the SALT cap in 2022 would give a 2.8% bump to the after-tax income for the top 1% of taxpayers, and a 1.2% bump to the top 2 to 5%. You can dive into the details at the Tax Foundation website. We'll have a link in the show notes. SALT Workarounds As for the work-arounds, CNBC reported last December that 19 states are offering a way for pass-through business owners to bypass the cap. (4) The report also says that five other states have similar laws in the works. Pass-through entities that qualify include partnerships, S-corporations and some LLCs. The workaround involves a credit for taxes paid instead of a deduction, which can be capped. But it's more complicated than that, and tax experts say that each individual's situation is different, so you need to have your tax accountant crunch the numbers. As for what Congress is currently doing about the SALT cap, Democrats had increased the cap to $80,000 in the House-passed "Build Back Better" budget reconciliation bill. That plan would have cost the government about $50 billion a year, according to the Joint Committee on Taxation, but the legislation died in the Senate and hasn't yet been resurrected. And now, President Bid

The Real Estate News Brief - Week Ending April 30, 2022; Growing Demand for ARMs, The 7-Year Foreclosure, Top Complaints about Neighbors In this Real Estate News Brief for the week ending April 30th, 2022... you'll hear about the surging demand for adjustable-rate mortgages, the years it takes to foreclose in some states, and the top reasons people dislike their neighbors. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Before we start, I want to let you know that we are hosting our first live event in over 2 1/2 years on May 21st in St Petersburg Florida. I'll be there giving my 2022 Housing Update, and we'll also have property teams from 10 different markets to update us on what's going on in their markets and share available income properties. We'll also have a tour of rental properties in St Pete on Sunday and then Jacksonville on Monday. Check it out at newsforinvestors.com Economic News We begin with economic news from this past week, and more concerns about inflation. The Federal Reserve's preferred inflation index rose again in March to an annual rate of 6.6%. That's up from an annual rate of 6.4% in February. But there are signs that inflation may be hitting a peak because the core rate of inflation went down for the first time in a year. The core rate excludes food and energy and decreased from 5.3% to 5.2% in March. The Fed believes the PCE is more accurate than the consumer price index or CPI because it's more comprehensive. (1) Despite all the worries about inflation, the job market is going strong. Initial claims were down 5,000 to just 180,000 last week. Continuing claims were also down to their lowest level since 1970, at approximately 1.41 million. (2) Rising mortgage rates are putting a damper on new home sales. The Census Bureau says that sales dropped 8.6% in March to an annual rate of 763,000. High prices are also discouraging buyers. The median price for a new home was $436,700 in March. That's about $77,000 more than it was in March of last year. (3) Pending home sales for existing homes were also down in March. The National Association of Realtors says they dipped 1.2%. It is predicting that sales will be down a total of 9% for the year. NAR's chief economist Lawrence Yun expects multiple offers to disappear, and calmer, more normal conditions to replace the homebuying frenzy we've been witnessing. (4) Because demand remains high for housing, home prices continue to rise. The S&P CoreLogic Case-Shiller 20-city index was up 2.4% in February. That brought the annual rate up to 20.2%. At a national level, annual home price growth rose to 19.8%. The Federal Housing Finance Agency reported similar results. It shows that home prices rose 19.4% year-over-year in February which was a 2.1% increase from January. (5) There are mixed reports on consumer sentiment. A survey on consumer confidence shows it dipped slightly in April because of inflation. But it also shows that consumers are still spending money on big-ticket items, despite the high prices. (6) Meantime, the University of Michigan's consumer sentiment index jumped higher by several points. Consumers are reportedly happy that gas prices have gone back down a bit, and are feeling more optimistic about the future. (7) Mortgage Rates Mortgage rates didn't move much, but the average 30-year fixed-rate mortgage remains above the 5% level. Freddie Mac says it was down just one basis point to 5.1%. The 15-year was up 2 points to 4.4%. (8) In other news making headlines… ARMs In High Demand as Fixed Rates Rise More home buyers are choosing adjustable-rate loans to keep mortgage payments lower at the beginning of their loan term. The Mortgage Bankers Association says demand for ARMs has "doubled" compared to three months ago The interest rate for an ARM was 3.78% last week, according to Freddie Mac. The Mortgage Bankers Association says the average rate for a 5-year ARM was 4.28%. Both are lower than the 30-year fixed rate, and that's driving up demand. (9) The Lengthy Process of Foreclosure Buying a foreclosure might get you a great price on a home, but in some places, the length of time it takes to foreclose could eclipse any monetary value. ATTOM Data Solutions published a report on the states with the longest average times to foreclose, and the winner was Hawaii, at 2,578 days. That's a little longer than 7 years. Louisiana, is second on the list with an average of about 2,000 days or 5.5 years. Other states on the top ten list include Kentucky, Nevada, Connecticut, New York, Florida, New Jersey, Pennsylvania, and New Mexico. New Mexico was last on the list but foreclosures there still take more than 3.5 years. (10) At the other end of the spectrum are states with the fastest foreclosure process. Montana came out at the top of that list, at 133 days. Mississippi was second at 146 days, and West Virginia was third at 197 days. What's Up with the Neighbors? The last story I'd like to share with you is a report on the top re