Real Estate News: Real Estate Investing Podcast

In this Real Estate News Brief for the week ending July 22nd, 2023... what economists are expecting from the Fed, why there's so much optimism about a soft landing, and what landlords are seeing for rent growth in today's market. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. We begin with economic news from this past week, and much of that news has been focused on what economists predict the Fed will do at this week's meeting. There's basically a consensus that the Fed will hike short-term rates another quarter point to squash inflation, and that that will likely be the final rate hike. But at the same time, most economists don't expect Fed Chief Jerome Powell to say that out loud, and he has predicted the need for another two rate hikes. But he's more likely to leave people guessing at this point, as Fed officials evaluate inflation data. And it's been good recently. The consumer price index or CPI dropped to 3.1% in June, but the core rate is still too high at 4.8%. The core rate eliminates food and gas and is considered a better gauge for determining what prices are doing... Check the show notes for links at newsforinvestors.com. You can see all the data for rent growth by following a few of those links. And please remember to subscribe to this podcast and leave a review! You can also join RealWealth by clicking on the "Join for Free" button. As a member, you have access to the Investor Portal where you can look at sample rental properties in various markets. You'll also have access to our experienced investment counselors who can answer questions and the property teams we've been working with. Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.marketwatch.com/story/everyone-thinks-the-feds-rate-hike-next-week-will-be-the-final-one-except-the-fed-dc5fb209?mod=home-page 2 - https://www.marketwatch.com/story/jobless-claims-drop-to-two-month-low-of-228-000-f6709597?mod=economy-politics 3 - https://www.marketwatch.com/story/home-prices-climb-to-highest-level-in-a-year-as-home-listings-dwindle-c49ad934?mod=economy-politics 4 - https://www.marketwatch.com/story/u-s-housing-starts-retreat-in-june-e4a71eaa?mod=economy-politics 5 - https://www.freddiemac.com/pmms 6 - https://www.redfin.com/news/housing-turnover-decline-since-pandemic/ 7 - https://www.corelogic.com/intelligence/us-rent-growth-returns-to-pre-pandemic-level-in-may-corelogic-reports/ 8 - https://yieldpro.com/2023/07/yardi-matrix-reports-solid-rent-growth-in-june/

The rent control debate is gaining momentum at the top of the legal food chain. New York landlords are asking the Supreme Court to overturn lower court decisions on a 2019 rent stabilization law, and several national real estate groups are showing support. If the high court takes the case and rules in their favor, experts say it could "destabilize" rent stabilization laws across the nation. 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 two landlord groups pushing for a Supreme Court review of the lower court rulings are the Community Housing Improvement Program and the Rent Stabilization Association. They are both based in New York, and claim that the 2019 "Housing Stability and Tenant Protection Act" is unconstitutional. The law is also known as the Rent Stabilization Law or RSL... You'll find links to our sources at newsforinvestors.com. You can also find out more about the real estate market and how rental properties can help you become financially independent by signing up as a RealWealth member. It's free to join, and takes just a few minutes. And don't forget to subscribe to his podcast! Thanks for listening! Kathy Fettke Links: 1 - https://www.bisnow.com/national/news/multifamily/national-landlord-organizations-join-chips-supreme-court-fight-against-rent-regulation-119647 2 - https://www.nationalreview.com/2023/07/the-case-against-new-yorks-rent-regulatory-regime/

In this Real Estate News Brief for the week ending July 15th, 2023... the best inflation news in a long time, why you might get some money back from BofA, and a ranking of state economies with two of my favorites at the top. 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 big news came from two promising inflation reports. With a tiny .2% increase in June, the Consumer Price Index, or CPI, shows that inflation is slowing down. The June reading is down from a .3% increase in May, and brings the annual rate down from 4% to 3%. It's the lowest rate of inflation we've seen since March of 2021. The core rate of inflation, which omits food and gas, rose the same .2%, but the annual rate is still on the hot side. It's currently at the 4.8% level. The core rate is considered a better gauge for price growth, and is still well above the 2% target the Fed is aiming for. But things are going in the right direction. (1) The Bureau of Labor Statistics also reported good news for wholesale inflation. It says the Producer Price Index or PPI rose .1% in June and indicates that wholesale costs may have stopped going up. The annual rate has now slowed from 1.1% in May to just .1% currently, which is VERY close to zero. The core rate shows the same monthly increase with an annual rate that is now 2.6%. Economists are still predicting that Fed officials will hike rates again at the next meeting despite these great reports, to make sure they've squeezed every last drop of inflation out of the economy. (2) San Francisco Fed President Mary Daly more or less confirmed that view, saying that "It is really too early to declare victory on inflation." She says she's still in the wait-and-see mode. (3) Fed Governor Christopher Waller also spoke out after the CPI report saying: "The report warmed my heart, but I have got to think with my head." He says he's seeing two more 25-basis-point hikes by the end of the year. (4) The weekly jobless report continues to highlight the strength of the job market. Jobless claims dipped again from a revised 249,000 to 237,000 last week. The decline may have also been impacted by the July 4th holiday, if workers didn't apply for benefits right away. But the big picture shows that the job market is still going strong. (5) Mortgage Rates Mortgage rates are not doing what we'd like them to do. Freddie Mac says the 30-year fixed-rate mortgage was up 15 basis points last week, to an average of 6.96%. The 15-year was up 6 points to 6.3%. (6) The Mortgage Bankers Association reports that average rates were up in the 7% range, but decreased slightly after those reports on inflation. (7) In other news making headlines… Bank of America Caught Double-Dipping Bank of America is doing damage control for millions of dollars worth of illegal transactions. The Consumer Financial Protection Bureau says that BofA allowed fees to be repeatedly charged for the same insufficient funds transaction, withheld credit card reward points and cash, and created unauthorized accounts to help meet sales-based incentive goals. (8) BofA will be paying $100 million to repay customers for illegal fees or unauthorized account charges, and about $90 million in penalties. Customers don't have to apply for this compensation. The bank will either deposit any money owed into customer accounts, or send checks to the account holders. Lenders Offer Loan Tweaks to Help Commercial Borrowers The commercial real estate crunch is easing somewhat with the help of banks trying to prevent defaults. Many of those loans are expiring, and refinancing has become a problem because of high interest rates. Real estate analysts say that banks are dealing with the situation by offering loan extensions and modifications, selling derivatives to fix interest costs, and offering subsidized loans to investors to purchase defaulted loans. Analysts say that lenders are hoping that this will help tide things over until properties become more profitable and refinancing can take place with lower interest rates. And the data reportedly shows that it's working. As an example, a U.S. News article says that about $2.1 billion in CMBS office loans matured in May. That's almost double the total amount that matured from January through April. A Moody's report says that a little more than a third of those loans were modified or extended. The default rate is currently at about 4% which is well below the projected 10%. Analysts are however, predicting that it could hit 6% by the end of the year. Best State Economies List Florida, Texas at the Top! This last story is about the top 10 U.S. state economies, and the two top ranking states are at the top of my list for investors. According to CNBC's America's Top States for Business study, Florida leads the nation with a score of 340 out of a possible 360 points! GDP growth last year was

This is the 1300th episode of our news podcast! And to celebrate we are featuring another big win for our RealWealth investors -- the public opening of a man-made crystal lagoon in the Tampa Bay area that's now the nation's largest! The 15-acre Mirada Lagoon is part of a massive development project in Pasco County that was syndicated by us at RealWealth. It was supposed to open a few years ago, but thanks to the pandemic and supply chain issues, those plans were delayed until now! (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. We acquired the land for about 10 cents on the dollar nearly a decade ago, during the downturn. It was called Cannon Ranch at the time, and slated for 4200 homes on a golf course, but our team thought that consumers might be ready for something different. We brought on a partner, Metro Development Group, and decided to replace the golf-course plan with a huge 15-acre crystal lagoon. We changed the name from Cannon Ranch to The Mirada. It's located near Wesley Chapel, north of Tampa, right next to another community with the nation's first crystal lagoon, also built by Metro. It's the 7.5 acre Epperson Lagoon. As reported by the Orlando Sentinel, Metro has now opened a total of three lagoons in the Tampa Bay area. (2) The Neighborhood News says Metro is opening a fourth in Ft. Myers, with plans for several more in central Florida. (3) What Are Crystal Lagoons? So exactly what is a crystal lagoon? They've been described by some as nothing short of massive and stunning. (4) They have the ability to transform any ordinary piece of land into a safe, family-friendly beach. They are filled with crystal clear water that's perfect for swimming, paddle boarding, kayaking and other water sports. They can be as deep as nine feet or as shallow as needed for young children. And there is no limit to their size. The technology is also impressive. Crystal Lagoons use one hundred times fewer chemicals than swimming pools on a per-volume basis. Instead of chlorine they use an automated remote-controlled system that measures the water's PH, temperature, and other factors to determine the exact locations that need disinfecting. Disinfectant is then used only in those places. They also have a low-cost ultrasonic filtration system for solid matter that uses sound waves to push dirt into a giant suction cart that travels on the bottom of the pool. It's very energy efficient and uses 50 times less energy than typical swimming pool technology. And, they are good at conserving water. Despite the massive volume of water needed to fill one of these pools, they use 30 times less water than a golf course and 50% less water than a park of the same size. And, they use anti-evaporation technology that conserves even more water. Mirada Lagoon - Massive and Stunning! The Mirada is so big, it took 45 days and about 33 million gallons of water to fill it! It also needed about 17 million pounds of sand to create a mile-long shoreline around the lagoon. Amenities include a swim-up bar, a water slide, a "splash zone" for kids, and a floating obstacle course. Visitors can rent cabanas, as you might expect, along with paddle boards and kayaks to cruise around the lagoon. Metro's vice president of marketing and communications, Vaike O'Grady, says the Mirada Lagoon presented some unexpected challenges, like the Covid-related supply-chain issues and labor shortages, but overall, demand for crystal lagoons has been strong. She said of the company's plans: "After we saw what the success was, we realized we could do this again and again because there was so much demand for it." The overall size of the Mirada development is about 2,000 acres. Although some residents already live there, plans call for a total of 4,500 homes from six different builders. O'Grady says prices will range from the high $200s to more than $1 million. Popularity Growing for Crystal Lagoons She says about 40% of the buyers come from out-of-state, and that many are finding the lagoon an affordable alternative to a home along the ocean. She says: "When they come here and they see they can have an inland lagoon lifestyle from prices as low as the high $200s, they're blown away by the value." Crystal lagoons are becoming popular in many areas. Including the Palm Springs area of Southern California. That's where Disney is building a community called Cotino with another mammoth-sized lagoon. It was initially going to be about twice the size of the Mirada, but plans have apparently been scaled back to about 24-acres, which is still substantially larger than the Mirada Lagoon. As for how you can enjoy the Mirada Lagoon – members of the general public can purchase day passes. All-day passes range from $20 to $40. (5) You can also learn how to buy real estate in places like this as a member of RealWealth. It's free to join for access to our housing market data, investment counselors

In this Real Estate News Brief for the week ending July 8th, 2023... what's on the minds of Fed officials, how homebuyer competition is impacting prices, and what isn't happening with the back-to-office 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 the release of the minutes from the central bank's last policy meeting. As you know, members of the Federal Open Market Committee voted unanimously in favor of a pause in rate hikes, but the minutes show that some members were in favor of another 25 point increase. The minutes also noted that the economy has been stronger than expected and that Fed officials don't see a lot of "clear signs" that inflation is headed to their 2% target. (1) Fed Chief Jerome Powell has said that more rate hikes are likely. We'll get two inflation reports in the coming week that will give us a better idea of what's happening with inflation. The job market also remains strong, although the latest reports show a slight weakening and some economists don't think it's enough to avoid another rate hike. The unemployment report was up 12,000 from the previous week to a two-year high of 248,000 initial claims. But the number of ongoing claims was down 13,000 to 1.72 million. It's the third week in a row that they went down. As MarketWatch reports, the decrease in continuing claims is probably due to laid-off workers finding new jobs quickly, thanks to a strong job market. Although it's great that people are employed, Fed officials feel that it also contributes to wage growth and inflation, which they are trying to control. (2) The Labor Department also reported that job openings fell below the 10 million mark in May, which is another sign that the labor market is cooling slightly. (3) And companies only added 209,000 jobs in June. That's the smallest number of new jobs since 2020, but the unemployment rate also fell from 3.7% to 3.6%. Average hourly pay is also up about 4.4% on an annual basis. (4) Most of the new jobs are for education, health, and the government, but construction jobs are also among the industries contributing to labor market growth. Mortgage Rates Mortgage rates are defying gravity and slowly creeping higher. Freddie Mac says the average 30-year fixed-rate mortgage is 6.81%, but Mortgage News Daily says it hit 7% this last week. Freddie's chief economist Sam Khater blames the high rates on the strong economy, sticky inflation, the Fed's rate hikes, and of course, a persistent low inventory of homes. (5) (6) In other news making headlines… Homes Selling Above Asking Price One Again Homes are selling above their asking price for the first time in almost a year. Redfin says the average sale-to-list price ratio hit 100.1% for the four weeks that ended on July 2nd. The report says low inventory is the main reason for the higher sales price. (7) Redfin says that new listings are down 25% from a year ago, and the total number of homes for sale is down 12%. There's no lack of demand however. Redfin says that requests for home tours and other services are up 4% compared to a month earlier. Agent Jeremy Lewis out of Portland, Oregon, says: "Almost every home is getting multiple offers and selling over asking price. The lack of supply is making it feel almost like 2021 all over again." Although he says the bidding wars are happening at a lower price point because buyers are getting squeezed by higher mortgage rates. Return to the Office Hit a Plateau at 50% Companies trying to get employees back in the office have hit a plateau. According to security company Kastle Systems, U.S. office workers are back in their offices about 50% of the time. The national average was actually a little less than that at 49.8% in late June. Kastle analyzes office usage in 10 U.S. metros. That's up from about 40% last year but the number hasn't changed much since the beginning of this year. (8) Some companies are cracking down on employees to get them into the office. Citigroup is reportedly threatening employees with "consequences" if they don't conform to the hybrid schedule. That's usually three days a week. Google is also warning employees that office attendance will be part of their performance review. Texas Lawmakers Approve Huge Cut in Property Taxes! In breaking news out of Texas – State lawmakers are making it a whole lot more affordable to own property with the largest property tax cut in state history! It's not quite a done deal yet, but the Texas House and Senate have agreed to an $18 billion dollar package to reduce property taxes. $12 billion will go toward a reduction in the school property tax for all homeowners and businesses. It also includes a $100,000 homestead exemption and a 20% limit on appraisal growth for non-homesteaded properties worth at least $5 million. According to Houston Public Media, state lawmakers expect to pa

In this Real Estate News Brief for the week ending July 1st, 2023... where we stand on inflation and rate hikes, how many homes we need to meet demand, and the amount of money Americans expect to need in retirement. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week and a report on the Fed's preferred inflation measure. The government released the latest CPI on Friday which shows the lowest rate of overall inflation since April of 2021. Prices rose a mere .1% which brought the annual rate down to 3.8%. That's down from 4.3% in March. At the core level, inflation remains a little sticker. It omits food and energy, and shows a .3% price increase with an annual rate of 4.6%. (1) The good news is that inflation is coming down, but maybe not fast enough to please the Fed. The central bank skipped a rate hike in June, but Fed chief Jerome Powell is hinting at the need for another one or two rate increases. He said during the European Central Banks annual forum: "Although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough." (2) He talked about the risk of overdoing the rate hikes as compared to the risk of underdoing them and allowing inflation to keep going higher. He said those two risks are starting to come into balance but are not there yet. (3) One risk of overdoing it is the risk to the banking system, but new stress tests on the nation's 23 largest banks show they are in good shape. In fact, the results show they are in better shape than last year, despite a more painful worst-case scenario. (4) The economy also continues to show resiliency. It was supposed to falter under the pressure of higher interest rates, but the latest revision on the GDP shows the first quarter was up a solid 2%. It was previously calculated at 1.3%. Second quarter results aren't in yet, but officials are expecting to see a 1 to 2% expansion. (5) The job market also remains strong. Initial claims have been rising very slowly, but this last week, they were down 26,000 to a four-week low of 239,000. Continuing claims were also down 19,000 to a total of 1.74 million. As MarketWatch reports: "Still no sign of a recession." (6) As for the housing market, new home sales were surging in May. The Commerce Department says they were up more than 12% for the month to a seasonally adjusted annual rate of 763,000 homes sold. That's quite a bit higher than Wall Street economists had anticipated. Those figures are volatile however, and are often revised, but demand is strong as inventory remains low, especially for existing homes. (7) And those sales were down in May. The National Association of Realtors says that pending home sales fell almost 3%, thanks to such low inventory. But despite the lack of contract signings, NAR's Chief Economist Lawrence Yun says: "The housing market is resilient with approximately three offers for each listing." (8) That kind of demand is keeping pressure on home prices. The S&P CoreLogic Case-Shiller national home price index was up .5% in April. For the 20-city index, home prices were up .9%. Miami shows the largest year-over-year gain at 5.2%. Chicago is second at 4.1%. Other cities with strong home price growth include Atlanta, Charlotte, Cleveland, and Tampa. The biggest home price declines were in Seattle at 12.4% and San Francisco at 11.1%. (9) Mortgage Rates All this as mortgage rates creep higher. Freddie Mac says the 30-year fixed-rate mortgage was up 4 basis points this last week to 6.71%. The 15-year was up 3 points to 6.06%. (10) In other news making headlines… Zillow: U.S. Need 4.3 Million More Homes Zillow just published a report that shows just how many homes are needed to meet U.S. demand. The study says we are short 4.3 million homes, and the number of people needing a new home is twice the number of homes available. (11) A Zillow economist compared the situation to a game of musical chairs because there are just not enough homes for everyone who wants one. The report says low income families are getting hit the hardest with 68 percent of them living in shared spaces. Americans Put a Dollar Amount on Retirement Americans are placing a higher price tag on retirement, but a new study shows that they aren't saving anywhere near enough. The research by Northwestern Mutual says the magic number for all age groups is $1.27 million, but it varies quite a bit from one age group to another. Of the 2,740 adults who participated in the survey. People in their 50's expect to need $1.6 million which is the most of all the age groups. People in their 60's and 70's expect to need less than but close to $1 million. For the 20 to 40-something people, the figures were $1.2, $1.4, and $1.3 million for each of those decades. Unfortunately, the survey shows that most people have only a small fraction of those amounts in their sav

Fraudulent applications for the government's Covid-era Paycheck Protection Program helped push home prices higher in some markets. That's the conclusion of new research from the University of Texas at Austin. It says that fraudulent PPP loan recipients increased their home purchase rate more than non-fraudulent loan recipients, and that that corresponded to higher home prices. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The research paper shows that home price growth was much faster in areas with a high amount of "suspicious lending per capita." In other words, areas with higher rates of loan fraud correlated with fraud recipients who also bought property. That may have increased prices due to competition among well-funded buyers, or maybe because it was easy to spend a little more on a home with easy money. Loan Fraud Impact on Home Prices So what was the estimated size of this impact? The report says: "at the zip code level, house prices in high fraud zip codes increased 5.7% more than in low fraud zip codes within the same county." The analysis also accounted for land prices, historical home pricing trends, remote work impact, migration, population density, and how close the homes were to business districts. The PPP loan program distributed more than $793 billion dollars from April 2020 through May 2021. Research done previously at the Austin university labeled $117 billion of those PPP loans as "suspicious." Study co-author and professor of finance, Sam Kruger, says: "The fraud was highly concentrated geographically. And because of that concentration, there may have been spillover effects in some of those local areas." (2) Why Did This Happen? Government data shows that home prices rose 24% nationwide from November of 2019 through November of 2021. Many factors contributed to those high prices including remote work, migration from crowded urban areas, and a desire for larger homes with yards, but this new research says that money handed out by the government to help business owners retain employees may have contributed to home price growth. Kruger says: "This is a very specific type of stimulus that injected cash into certain areas, and it seems to have played a pretty significant role." How Did This Happen? The report also blamed lax loan standards among Fintech companies, which had a higher rate of fraudulent loans than traditional lenders. It also suggested that social media was used to spread the word about getting fraudulent loans from those Fintech loan providers. In a zip code map of the country, areas where much of this fraud occurred was along the sun belt, as you might expect. If you'd like to read more about the study and check out that map, you'll find links in the show notes at newsforinvestors.com. You can also learn how to buy real estate legally as a member of RealWealth. It's free to join for access to our housing market data, investment counselors, and referrals to real estate professionals that you might need to help build a portfolio of rental properties. Thanks for listening, and please remember to subscribe to the podcast! Kathy Fettke Links: 1 - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4487877 2 - https://www.cnbc.com/2023/06/26/ppp-loan-fraud-drove-home-price-inflation-in-certain-markets.html

In this Real Estate News Brief for the week ending June 24th, 2023... what the Fed Chief is saying about another two rate hikes, where evictions are rising the most, and how the economy is impacting commercial 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 comments from Federal Reserve Chairman Jerome Powell about interest rates. He testified before Congress that U.S. inflation is still too high and that more rate hikes are likely this year. He told members of the House Financial Services Committee: "Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year." But he also says that decisions will be made "meeting by meeting" so there's no timetable as to if or when this will happen. Most of the members are anticipating two more quarter point rate hikes. (1) In a more positive light, Powell said that it's possible to get inflation under control without a huge increase in unemployment. During his testimony before the Senate Banking Committee, he said that he sees the labor market cooling gradually but doesn't expect to see significant job losses. (2) Federal Reserve President Raphael Bostic is one of just two committee members who doesn't believe the Fed should hike rates again this year. He said in an interview that interest rates should remain where they are for the time being, and that rate cuts should not happen until later "next" year. He believes the economy hasn't yet felt the effects of previous rate cuts, and doesn't want the Fed to make the mistake of causing a significant economic downturn. (3) The weekly unemployment report shows that initial claims are rising, although the number of applications was flat last week. The government says that 264,000 people requested benefits which is about the same as the previous two weeks. But, the last three weeks represent the highest level we've seen since late 2021. (4) Builders are feeling bullish about new home construction. Housing starts for single-family homes surged in May to a new high point for the year. The National Association of Home Builders says housing starts were up 21.7% to an annual pace of 1.63 million. Economists were expecting a decline of .8%. (5) The association's monthly confidence index also reflects a feel-good attitude among builders. The index was up 5 points to 55 which puts it in positive territory. (6) Meantime, the sale of existing homes rose a bit in May. Sales were up 3.8% to an annual rate of 1.08 million, but due to high mortgage rates, prices were down about 3%. It's the largest monthly drop in existing home prices since December of 2011. (7) Mortgage Rates Mortgage rates didn't move much this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 2 basis points to 6.67%. The 15-year was down 7 points to 6.03%. (8) In other news making headlines… Eviction Rates Are Rising in Some Cities Rising rents and a lack of pandemic-era protections are pushing many renters into eviction proceedings. Princeton University's Eviction Lab tracks filings in almost three dozen cities and 10 states. It reports that eviction rates are now 50% higher than they were before the pandemic. (9) Some of the hardest hit cities include Houston with rates that were 56% higher in April, Minneapolis/St. Paul with rates that were up 106% in March, 55% in April, and 63% in May. Nashville, Phoenix, and the state of Rhode Island are also seeing a lot of evictions. Zillow reports that national rents are up 5% from a year ago, and almost 31% from 2019. High eviction rates right now are also due to the fact that many tenants were protected from being evicted during the pandemic. Distress Starting to Hit Commercial Real Estate We're beginning to see more distress in the commercial real estate market. A report from MSCI Real Assets shows about $64 billion in distress for the first quarter, and a total of about $155 billion in assets that are now at risk. (10) Retail properties are suffering the most with about $23 billion in distress. But those problems began "before" the pandemic as stores lost business to online shopping websites. Office properties are now seeing about $18 billion in distress thanks to the rise in remote work, and leases that need to be renewed at high interest rates. Multi-families are also seeing some amount of distress. Delinquency rates for multifamily loans from major investment groups hit the 3% level at the end of the first quarter. That's it for today. Check the show notes for links at newsforinvestors.com. And please remember to hit the subscribe button, and leave a review! I also encourage you to join RealWealth at newsforinvestors.com. It's free to join and will give you access to information about how you can build wealth with single-family rentals. Membership will also connect you t

The latest report on single-family rents shows that rent growth is still positive, but declining in step with the Fed-induced economic slowdown. CoreLogic just released its Single-Family Rent Index for April which shows another monthly dip and rent growth levels for various metros. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The CoreLogic report shows that single-family rents were up 3.7% in April for all the U.S. metros included in the index. That's down from 4.3% in March, and 14% from April of last year. The report shows single-digit rent increases for the most part. Las Vegas was the only exception with a negative reading of .8%. Despite the huge year-over-year decline, single-family rents are still up almost 26% since the beginning of the pandemic, thanks to strong demand and low inventory. Gains Approaching Pre-Pandemic Levels CoreLogic principal Economist, Molly Boesel, said in a press release: "Single-family rent growth has slowed for a full year, and overall gains are approaching pre-pandemic rates." She says: "Prior to 2020, single-family rent gains increased in the range of 2% to 4% for nearly a decade." Boesel also said that it appears rent growth is bottoming out which means that rent increases we've seen over the past three years are "more or less permanent." The CoreLogic analysis separates rent growth into four rent-level tiers and two property types. For lower-priced single-family homes, which are valued at 75% or less than the regional median, rent growth was up 6% in April. For lower-middle priced homes, at 75% to 100% of the regional median, rent growth was up 4.6%. High-middle priced homes, which fall in the 100% to 125% of the regional median, were up 4.1%. And higher-priced homes were up 2.4%. As for attached versus detached homes, attached single-family rents were up 4.6% while detached rents were up 2.6%. Top Rent-Growth Metros Let's take a look at a few of the top 20 rent-growth metros. CoreLogic says that Charlotte, North Carolina took the top spot with the highest year-over-year increase in single-family rents. They were up 6.9% in April. Boston and Orlando had the next highest rent-growth levels at 6.2% and 6% respectively. A few other metros I find interesting include Dallas with 3.5% in April, and Atlanta with 3.4%. The index is comprised of close to 100 metros. That's it for an update on single-family rent growth. You can read more about CoreLogic latest report at newsforinvestors.com. You can also find out more about investing in single-family rentals at as a RealWealth member. It's free to join for complete access to all our educational material along, networking opportunities, and real estate professionals that can help you build wealth. Please remember to subscribe to the podcast if you haven't already! And thanks for joining me on the Real Estate News for Investors. -Kathy Fettke Links: 1 - https://www.corelogic.com/intelligence/us-single-family-rent-growth-continues-yearlong-descent-in-april-corelogic-reports/

California is hoping to solve a massive homeless problem with a change in the state constitution. One lawmaker is proposing an amendment that proclaims "adequate housing" as a fundamental right. It's not clear what "adequate housing" would mean, but if it gets on the ballot, and it's passed by voters, it would be the first such constitutional amendment in the nation. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Assembly Constitutional Amendment 10 Assemblyman Matt Haney of San Francisco proposed the amendment which is currently working its way through the state legislature. The measure, called Assembly Constitutional Amendment 10, would make state and local governments responsible for upholding this mandate. There would have to be some guidelines as to what's "adequate." As reported by the Orange County Register, it could include the creation of more housing, better tenant protections, the repurposing of under-utilized or vacant properties, as well as housing subsidies. (1) What is "Adequate Housing"? Lobbyist Chris Micheli told the Register: "Some people might view 'adequate' as merely having a roof over your head. It could also mean shelter inside a gymnasium or a large building of some sort, almost like when we have emergencies." Or would it mean that everyone is entitled to a standalone single-family home or an apartment? Assemblymember Haney told the Orange County Register that: "California has been at the epicenter of the housing crisis" with 30% of the nation's homeless living in California. Haney says: "We have more Californians living on the street than anywhere else in the nation." Basic Human Needs: Housing, Food, Water Assemblymember Sharon Quirk-Silva, who supports the proposal, says the goal is to consider housing as a basic human need. She says: "There (are) really only three basic needs… and that is housing, food and water… And I think many of us grew up taking that for granted, but what we've seen over the last decade in California has not only been a housing crisis but, of course, a homeless crisis. And that's what propels me to support this." (2) She says the big challenge is the housing shortage. There are just not enough beds for all the people who need them. She says: "We just have not kept pace with housing production in California…" That's resulted in high rents, and as as rents move higher, more people end up on the street, or they move out of state. But she says: "Many individuals are just one rent payment away from being homeless." To get on the ballot, the proposal would need approval by a two-thirds majority in both the State Assembly and Senate by June of 2024. It received a 6 to 2 approval in the Assembly Committee on Housing and Community Development. That pushed it on to a Senate committee. (3) Concern About the Courts Setting the Standard Some of the lawmakers expressed concern about who would be responsible for setting the "adequate housing" standard. "Assemblyman Joe Patterson of Rocklin, who voted against the proposal, said: "I think the state and local governments haven't done a good job on housing which I think has contributed to homelessness, but I'm concerned about the hundreds of judges we have in California having different ideas about what this means." Cal Matters reports that more than a hundred groups and organizations that advocate for renters and affordable housing are showing support for the proposal, while none are publicly opposing it. But, it did say that the League of California Cities has "expressed reservations." (4) Price Tag? As for the cost of the bill, Cal Matters cited a study done in 2022 by the Corporation for Supportive Housing and the California Housing Partnership. That analysis determined that to house all the homeless people living in California, it would cost $8.1 billion a year for the next 12 years. Before that, in 2020, Governor Gavin Newsom vetoed a bill that would have guaranteed housing for everyone. He said the estimated $10 billion a year price tag was too much. Dramatic Shift in Our View of Housing The proposal would create a dramatic shift in the way we view housing. And despite the odds of it making it through the legislature, onto the ballot, and approved by voters, the end result would be game-changing. In the words of Micheli: "To have something enshrined in the constitution is very significant." You can read more about this by following links in the show notes at newsforinvestors.com. You can also become a member of RealWealth while you are there to learn more about housing and the real estate market. Just click on the "Join for Free" button in the upper right corner. And please remember to subscribe to the podcast! Thanks for listening! Kathy Fettke Links: 1 - https://www.ocregister.com/2023/05/16/how-adding-a-right-to-housing-in-the-california-constitution-could-alleviate-the-crisis-2/ 2 - https://enewspaper.dailynews.com/infinity/articl

In this Real Estate News Brief for the week ending June 17th, 2023... why we might see two more rate hikes this year, what the latest consumer price report is showing us, and the cities that are attracting the most attention from renters! 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 that grabbed headlines this last week. Members of the Fed's Open Market Committee decided to put their rate hike regimen on pause for the month of June, but said that two more rate hikes are likely later this year. The decision was unanimous for the pause, but not so for the rate hikes. Two members don't see any further hikes, four are anticipating one more rate hike, and nine are expecting the need for two. Two more believe we'll need three, and one is saying four. (1) By holding the interest rate steady for the time being, the Fed will have a chance to "assess additional information and its implications for monetary policy." Fed Chief Jerome Powell said at a news conference: "We have raised our policy interest rate by five percentage points, and we've continued to reduce our security holdings at a brisk pace. We've covered a lot of ground and the full effects of our tightening have yet to be felt." The Federal Funds rate is currently in a target range of 5 to 5.25%. Assuming quarter-point hikes, another two would bring that up to about 5.6%. Committee members meet next in July. Powell emphasized that the "core rate" of inflation for the personal consumption expenditure index, or PCI, is the most important indicator. The Fed received two other reports on inflation right before the meeting. The consumer price index, or CPI, shows that prices rose only .1% in May, mostly due to less expensive gas. The low rate of monthly inflation brought the yearly rate down from 4.9% to 4%. That's the lowest it's been since March of 2021. When you omit prices for gas and food to get the core rate, there was a .4% gain with an annual rate that slipped from 5.5% to 5.3%. (2) The U.S. Department of Labor Statistics also released the producer price index, or PPI, for May. It shows that wholesale prices fell .3% in May. It's the third time they've gone down in the past four months. That brings the yearly rate down from 2.3% to 1.1%. Again, the reading is slightly different for the core rate, which didn't move in either direction. The yearly core rate dropped from 3.3% to 2.8%. The PPI represents what companies pay for producing their goods such as packaging and transportation, which they often pass on to the consumer. (3) Weekly jobless claims were unchanged from the previous week at 262,000, while the number of continuing claims was up about 20,000 to a total of 1.78 million. (4) Mortgage Rates Mortgage rates were down slightly for the week. Freddie Mac says the average 30-year fixed-rate mortgage was down two basis points to 6.69%. The 15-year was down 3 points to 6.1%. (5) In other news making headlines… Potential Sellers Remain on the Sidelines High interest rates are keeping many potential sellers on the sidelines. Redfin notes that almost everyone with a mortgage has an interest rate below 6%. About 80% of homeowners have an interest rate below 5% and almost 25% have one below 3%. (6) As for inventory, Redfin says there are about 6% fewer homes for sale now than there were a year ago, and 40% fewer homes for sale than there were five years ago in June of 2018, before the pandemic. (7) Redfin blames the shortage on high mortgage rates, and a construction slump that began more than a decade ago. The number of months it would take to sell the inventory on hand is 2.6. A housing market with a balance between supply and demand typically has four to five months of supply. Most Popular Cities Among Renters A new report shows that the Midwest has become quite popular among renters. According to RentCafe's Rental Activity report, Kansas City, Missouri, is getting the most attention from renters. Runner-up is Overland Park in Kansas which is a suburb of Kansas City. Minneapolis was third, followed by Cincinnati and Albuquerque, New Mexico. Detroit took sixth place, Atlanta seventh, and Orlando eighth. Rounding out the top ten are Arlington, Virginia, and Raleigh, North Carolina. You can get the full list of 30 cities by following links to the article at newsforinvestors.com. Make sure you are signed up as a RealWealth member to learn more about real estate investing in many of the markets on this list. And don't forget to subscribe to the podcast! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.cnbc.com/2023/06/14/fed-rate-decision-june-2023.html 2 - https://www.marketwatch.com/story/inflation-slows-again-cpi-shows-and-might-keep-fed-on-sidelines-5137bc46?mod=economy-politics 3 - https://www.marketwatch.com/story/wholesale-prices-shrink-again-ppi-finds-and-point-to-slower-inflation-ahead-1de0968?mod=bnbh_mwarticle

In this Real Estate News Brief for the week ending June 10th, 2023… what builders are saying about the lot shortage, where rent growth is highest and lowest, and the rising number of all-cash offers for homes. 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… which doesn't amount to much. Economists are focused more on what's coming up "this week." The Fed's June meeting is scheduled for Tuesday and Wednesday where members of the Federal Open Market Committee will be deciding what happens next with interest rates. CNBC reports that a majority of economists are predicting a pause on rate hikes, but that we could see another rate hike in July. (1) Much depends on where we stand on inflation right now, and we're set to get those numbers just ahead of this week's Fed meeting. The government will release May reports on the Consumer Price Index, or CPI, and the Producer Price Index, or PPI. The PPI will tell us what's happening with wholesale prices. The only economic report that I'd like to share in this episode is the weekly jobs report. It shows a surge in jobless claims. They were up 28,000 from the week before, to a total of 261,000. As reported by MarketWatch, that's a two-year high. (2) According to Logan Mohtashami, lead analyst of HousingWire, if jobless claims break over 323,000 on the four-week moving average, the 10-year yield would likely decline along with mortgage rates. Mortgage Rates Mortgage rates settled down a bit this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 8 basis points to 6.71%. The 15-year was down 11 points to 6.07%. (3) In other news making headlines… Lot Shortage Easing Up But Still an Issue The lot shortage appears to be easing up, but it's still not easy for builders to get the buildable lots they need. In a report by the National Association of Home Builders Builders, 42% of single-family builders say the supply is "low" while another 25% says it's "very low." That's a total of 67% reporting some kind of shortage. But it's better than in 2021 when 76% of builders said they were having a tough time finding enough lots. (4) The survey also shows a more acute shortage among the most desirable "A" lots. 67% of builders report low or very low access to those lots, while 58% reported difficulties getting ahold of "B" lots, and 52% said the same about "C" lots. The NAHB says that a lack of easy credit is one reason that builders can't get the lots they need. The association also blames government regulation. It says the red tape involved with building a single-family home is responsible for about 42% of the cost of the lot. Asking Rents Down Slightly Nationwide Asking rents are down slightly nationwide according to data from Redfin.com and Rent.com. The latest report shows the median U.S. asking rent was down .6% in May to $1,995. It's the first time rent growth has decreased since March of 2020, and is well below a near-record in May of last year, when year-over-year rent growth was up 16.5%. (5) An increase in supply is one of the reasons that rent growth is slowing down. Builders are building more apartments and single-family homeowners are often choosing to rent out their previous homes instead of selling them. Redfin expects more of those homes to hit the market once housing prices bounce back. But rent growth varies from region to region. Redfin says that rent growth has fallen the most in the West. It was down 2.1% year-over-year. In other parts of the country it has gone up. It was up 5.4% in the Northeast, 4.9% in the Midwest, and .8% in the South. More Buyers Paying Cash for Homes More and more homebuyers are avoiding high interest rates by paying for homes in cash. Redfin reports that 33.4% of the homes bought in April were paid for in cash. That's up from 30.7% in April of last year. Redfin Senior Economist Sheharyar Bokhari says the homebuyer who can afford to pay in cash is weighing two options: "They can use cash to pay for the home and avoid high monthly interest payments, or take out a loan and pay a high mortgage rate. In that case, they could use the money that would have gone toward an all-cash purchase to invest in other assets that offer bigger returns." That's it for today. Check the show notes for links at newsforinvestors.com. While you are there, be sure to hit the Join for Free button. You'll get complete access to our website, with information on real estate investing, various rental markets, and our curated list of real estate professionals. That includes our investment counselors who are available to qualified investors, for free. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.cnbc.com/2023/06/09/wall-street-placing-its-bets-for-a-big-fed-meeting-and-inflation-reports.html 2 - https://www.marketwatch

The Arizona governor is calling for new limits on construction in the Phoenix suburbs due to a dwindling supply of groundwater. Governor Katie Hobbs announced a pause on new subdivisions that don't have a proven source of water. The policy comes after an analysis that says the supply of groundwater will fall short of demand over the next 100 years. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Growth Putting Pressure on Water Supply Phoenix is the 5th largest city in the U.S. with more than 1.6-million people, but the entire metro area has closer to 5-million people. Those suburbs and outlying areas are also growing rapidly, and putting more and more pressure on groundwater supplies that do not replenish rapidly, especially during times of drought. The city's groundwater analysis involved tests on more than 40,000 wells, along with the testing of aquifers and streamflows. Those tests show that water levels will fall about 185 feet across the entire basin over the next century. Outlying areas that are closer to the mountains will see a bigger decline in those levels. As reported by the Washington Post, the outflow of water is expected to exceed the inflow by a factor of 1.4 or 140%. The unmet demand would be about 4% or close to 5-million acre-feet of water over 100 years. One acre foot is about 326,000 gallons. A typical home might use half- to one-acre foot per year. At one acre-foot per home, about 50,000 homes would run dry in the Phoenix area over that 100 year period. At a half-acre foot, it would be more like 100,000 homes. Those are very rough figures. New Policy Requires Water Assurances To address the issue, Governor Hobbs announced that any new development projects will have to have proven water supplies. And many Phoenix area cities already have them, such as Scottsdale, Mesa, Gilbert, and Goodyear. But more rural communities that rely on groundwater don't have those assurances. Former Phoenix mayor Terry Goddard says: "You can't build unless you know exactly where the water is coming from." Developments that have already been approved can still move forward, but those cities are also scrambling to be sure they have adequate water for the decades ahead. Places like the town of Queen Creek, east of Phoenix, is working on a way to import water and meet demands for mushrooming growth. According to the Post, the town is spending $27 million to buy Colorado River water from a farm elsewhere in Arizona. It also made a deal for groundwater in another part of the state. The town's water resource director, Paul Gardner, says the town has about 10,000 lots ready to build, and water has been secured for those homes. But the city is working on ways to import water for other parts of the project, and while water importation will help solve the problem, Gardener also says the water price tag is rising. One of several landowners involved with development projects expects the cost of water to add as much as $15,000 to $25,000 to each home. Dan Reeb told the Post: "Arizona has gotten very good at stamping out four-bed, two-and-a-half bath, three-car garage homes, and a great job to go with it." But he says: "It's not going to be as inexpensive and simple as it has been for the last 50 years of phenomenal growth." Massive Development Project on Hold One massive development plan in Buckeye called Teravalis is now on hold. Plans call for some 100,000 homes on 37,000 acres for what would be the largest planned community in Arizona. But most of the property currently lacks the necessary water supply approvals. Buckeye officials are working on a solution, and they insist that their water future is secure. A big part of their plan is an $80-million deal to purchase groundwater from another rural part of the state. Each town, city and/or region is dealing with its own water supply problem, so there's a difference in how well they are each solving this problem. While some cities have already invested a lot of money in their water supplies, newer communities that rely on groundwater are having to rethink their options. In addition to informing residents about the water situation, Governor Hobbs is also offering assurances that the city won't be running out of water anytime soon. She says: "We are not running out of water and we will not be running out of water. We have to close this gap and find efficiencies in our water use." Sharon Megdal of the Water Resources Research Center at the University of Arizona says it's a matter of responsible growth. She says: "What these models are suggesting is that the patterns of growth may change." She says: "It's part of our reality check, an appropriate one, that we make sure the people buying these homes can be confident that the water is there." Groundwater as Key to the Future An Arizona State University professor doesn't feel that the issue is being addressed as a major priority. He told the Pos

In this Real Estate News Brief for the week ending June 3rd, 2023... a new surge in job openings and job creation, a big drop in investor activity, and a new legal battle over short-term rentals in New York City. 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 and several reports on the strength of the job market. The government reports that companies created a whopping 339,000 new jobs in May. That's a sign of strength for the job market, but the report also shows a surge in unemployment from 3.4% to 3.7%. That's the highest jobless reading since October. Some economists see that as a potential warning sign. But job market resilience is also showing up in a report on job openings which rose from a revised 9.7 million in March to a three-month high of 10.1 million in April. Wall Street Journal economists had forecast a drop in job openings to 9.5 million. (1) Job openings increased the most for retail, health care, transportation, and warehousing. They were down for manufacturing, government, leisure and hospitality. When comparing job openings to the number of unemployed workers, they rose in April from 1.7 to 1.8 openings per person. The Fed would like to see those numbers at a pre-pandemic level of 1.2. (2) The weekly unemployment report shows only a slight increase in claims. Applications were up 2,000 to 232,000. The takeaway from all this – the labor market is showing strength overall, with businesses hiring and no word of major layoffs. That's not exactly what the Fed wants to see. It's hoping for a weakening of the job market in its fight against inflation. (3) Builders are among those contributing to job market strength. The Commerce Department reports that construction spending was up 1.2% in April. That's much higher than a Wall Street forecast of .1%. The numbers break down to a .5% monthly increase for private residential construction but that includes a .8% decrease for single-family and a .6% increase for multi-family. The construction industry contributed 64,000 of those new jobs in May. (4) Home prices are still moving higher. The S&P CoreLogic Case-Shiller national index shows a .4% increase in March. The Southeast shows the strongest price growth, thanks to strong demand for housing and potential sellers who don't want to list their homes right now. The 20-city index was up .5%. A few of the cities showing the strongest price growth were Tampa at 4.8%, Charlotte at 4.7%, and Atlanta at 4.5%. On the flip side, Seattle prices are down 12.4%. San Francisco prices have also fallen by almost as much at 11.2%. (5) Consumers are showing more concern about the economy. The Conference Board says consumer confidence was down in May to a six-month low. (6) Mortgage Rates High mortgage rates are one of the things consumers are worried about. And they spiked a bit last week ahead of another potential rate hike by the Fed this month. Freddie Mac says the 30-year fixed-rate mortgage was up 22 basis points to 6.79%. The 15-year was up 21 points to 6.18%. (7) In other news making headlines… Record Slowdown for Investor Home Purchases Many investors are sitting on the sidelines as interest rates rise and home values fall. Redfin says investor home purchases shrank almost 50% year-over-year in the first quarter. But investors are still accumulating a large share of homes, buying up 18% of homes that sold in the first quarter. That's higher than pre-pandemic percentages, but down slightly from a peak of 20% last year. (8) The Redfin analysis covers 40 of the most populated metros in the nation, and includes both institutional and individual investors. But one Redfin agent says there isn't much activity from the Wall Street investors. The agent from Jacksonville, Florida, says: "Some smaller companies and mom-and-pop investors are still active in the market, but the big corporations aren't buying anymore." Redfin expects to see investor activity slow further as interest rates rise. Of course, investors with cash aren't feeling that kind of restraint. Short-Term Rental War Heats Up in New York City The battle over short-term rentals is escalating in New York City. Airbnb is suing the city for what it says is an "extreme and oppressive" law that the city plans to begin enforcing next month. It claims that the law is confusing and conflicts with Federal law that protects websites from liability for content posted by users. The New York Times also reports that three Airbnb hosts have filed similar lawsuits for a law that they say is too complicated. The Big Apple is a huge market for Airbnb with more than 38,500 active listings and $85 million in revenue last year. The company argues that short-term rentals are important for tourism and for hosts who need extra income. The city says it is committed to preserving permanent housing as it deals with a lack of housing for residents. Other cities

In this Real Estate News Brief for the week ending May 27th, 2023... you'll get the latest reading on inflation, how much home prices have come down in a year, and the long-awaited opening of Amazon's HQ2. 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. Minutes from the Fed's May meeting offer a few insights. They reveal that several officials believe we may not need more rate hikes to get inflation back down to the 2% level. Forward guidance also indicates a pause in hikes at the June meeting, although some Fed officials say rate hikes have not been ruled out. (1) And, with the latest report on inflation, there's new concern that the Fed could be inclined to hike rates again. The U.S. Bureau of Economic Analysis released the April reading on the PCE index. It shows it going in the wrong direction ahead of the Fed's next meeting. The index was up .4% and raises the annual rate from 4.2% to 4.4%. The core rate was also a disappointment. It eliminates prices for food and fuel, and was up .4% to an annual rate of 4.7%. The PCE is the Federal Reserve's preferred inflation gauge, so it will play an important role in their next rate hike decision. (2) The Fed minutes also offer a recession forecast, predicting a mild recession in the fourth quarter of this year. A moderately priced recovery would follow with unemployment set to increase this year, and then peak next year. Those numbers would start coming down in 2025, according to Fed officials. But they also acknowledged that the impact of the tightening process would be lagging, and that close monitoring of incoming data is essential. (3) Cleveland Fed President Loretta Mester spoke out on Friday after the PCE was released, and said the data shows the Fed has "more work to do." She believes that the central bank will need to rate rates again, while other Fed officials appear to be undecided. (4) Jobless claims pulled back from the previous week, after a major crackdown on fraudulent claims in Massachusetts. The latest report shows 229,000 applications for benefits. That's up 4,000 from the revised numbers for that surge in claims. As MarketWatch reports: "Jobless claims show little or no sign of rising U.S. layoffs since the early spring." (5) Consumer spending has kept a recession at bay, and April was no exception. Consumers shelled out .8% more money in April, which was double the amount that Wall Street Journal analysts had forecast. A lot of the money went toward new cars, but also for travel, recreation, and other services. As reported by MarketWatch, that's a sign of confidence in the economy. (6) Consumers also spent money buying new homes. New home sales were up 4.1% in April, according to the Commerce Department. That brings the annual rate up to 683,000 from a revised 656,000 in March. That number is seasonally adjusted, and reflects the "pace" of construction and how many homes would be built if that pace continued for the entire year. (7) One thing driving consumers to new homes is the low inventory of existing for-sale homes. The National Association of Realtors reports that pending home sales were flat for the month of April thanks to a shortage of those homes, and high mortgage rates. (8) Mortgage Rates Mortgage rates have continued to rise. Freddie Mac says the average 30-year fixed-rate mortgage was up 18 basis points to 6.57%. The 15-year was up 22 points to 5.97%. (9) The Mortgage News Daily reports a higher average of 7.14% for the 30-year and 6.54% for the 15-year. (10) In other news making headlines… High Home Prices Slowly Deflating Although home buyers are still struggling with affordability issues, home prices are deflating. Redfin reports that U.S. prices are down about 4.1% nationwide or close to $18,000 for the average home. That brings the median sale price down from $426,000 last year, to approximately $408,000 this year. (11) But some markets are seeing steeper declines, mostly because prices went sky-high previously, especially during the pandemic. In Oakland, for example, prices have come down 16% or about $174,000 for a typical home. In Boise, Idaho, the average home costs about $80,000 less than it did at the same time last year. And some markets have actually seen prices rise over the past year. According to Redfin, Tampa home prices were up 5.0% in April compared to last year, selling for a median price of $420K. On average, homes in Tampa sell after 22 days on the market compared to 7 days last year. Amazon HQ2 Is Now Open for Business! It was five years ago that Amazon solicited bids from various cities as it searched for the perfect place to build a second headquarters. Well, the day has finally arrived that Amazon's HQ2 has launched, and is welcoming its first employees. The winning city was Arlington, Virginia which now has more than two million square feet of new Amazon offic

It's another dose of bad news for office space providers. Researchers had previously estimated that remote work would take a 28% bite out of office values by 2029, but they apparently underestimated the impact. They are now predicting the decline will be closer to 44%. On the flip side of that coin, a drop in values will also make it easier for at least some of those buildings to be converted to badly needed housing, with the help of government incentives. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. As Bisnow reports, researchers had reported last year that office values would lose about $500 billion in value over ten years, from 2019 to 2029. Now those academic researchers from New York University and Columbia University are saying that office values have already surpassed that amount in just three years, from 2019 through last year. (1) Half a Trillion Dollar Loss in Value In New York City, values were down about $70 billion. In San Francisco, the loss in value was more like $33 billion. And in Charlotte, it was about $5 billion. Their research estimated a total of $506 billion, or more than half a trillion dollars, in lost value for the entire nation. Researcher Arpit Gupta says of the update: "The primary reason for the change is that we now estimate a more persistent work from home regime than before." He also says that researchers took into account work-from-home rates for various cities and says that New York was hit hard because of a high number of remote workers. Lost Tax Revenue, Lifeless City Centers Office owners aren't the only ones grappling with this situation. Cities are also dealing with lost tax revenue and downtown corridors that appear lifeless as office space sits empty. Unfortunately, not all office space is suitable for a conversion, and conversions are expensive. According to Josh Bernstien of Bernstein Management in the New York Times, just one in 20 office buildings in Washington, D.C. would be suitable for a conversion. And then the conversion might cost a whopping $400 to $500 a square foot. Bernstein says that it's often the case that building from scratch would cost less. (2) Most Office Space is Not Suitable for Conversion The Times cited a Moody's analysis that found only three percent of the buildings it tracked would be candidates for conversion because the median rent is so low. In New York, the median rent is just $55 a square foot. The analysis shows that only 36% of the office properties roughly match that value. And then on top of that, there's the cost of the conversion which includes design issues. As the Times reports, offices may have columns that are 20 feet apart, huge open areas, and windows that don't open. But, there is a growing trend to turn at least some of the now empty office space into housing. And state and local governments are recognizing the need for incentives. (3) States, Cities Incentivize Conversion Projects California is one of them with a $400 million program. Chicago is another. It's making almost $200 million available for developers in "tax increment financing" or TIFs. The Department of Transportation website describes a TIF as: "A value capture revenue tool." It says: "The TIF creates funding for public or private projects by borrowing against the future increase in these property-tax revenues. The intent is for the improvement to enhance the value of existing properties and encourage new development in the district." (4) Bisnow reports that the opportunities exist for these so-called "Office-to-Resi" projects and that developers are showing interest, so long as there's public money to subsidize them. A big decline in office values will also help make these conversions more affordable. Researchers say the key takeaway from all of this is that: "Remote work is shaping up to massively disrupt the value of commercial office real estate in the short and medium term." For real estate investors, when one door shuts, another opens. And the trend to convert office space to residential units is an opportunity, especially when it comes with government incentives. You can read more about this by following links in the show notes at newsforinvestors.com. If you haven't become a RealWealth member, hit the Join for Free button to learn more about real estate investing. It's easy to sign up, and will just take a minute. And please remember to subscribe to this podcast! Thanks for listening! Kathy Fettke Links: 1 - https://www.bisnow.com/new-york/news/office/persistent-wfh-could-wipe-44-from-office-values-by-2029-119082 2 - https://www.nytimes.com/2022/12/27/business/what-would-it-take-to-turn-more-offices-into-housing.html​​ 3 - https://www.bisnow.com/national/news/office/more-cities-are-giving-away-money-for-office-to-resi-projects-as-threat-of-obsolescence-grows-118474 4 - https://www.fhwa.dot.gov/ipd/value_capture/defined/tax_increment_financing.aspx

In this Real Estate News Brief for the week ending May 20th, 2023... what the Fed Chief is saying about interest rates and potential rate cuts, how the FHFA is responding to a controversy over new rules for home loan fees, and why mall owners have become interested in pickleball. 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 chief's response to predictions about what the central bank plans to do next. Jerome Powell spoke out at a conference at the Federal Reserve Bank of Chicago and said that Fed officials have made "no" decision yet on their next move. Many economists are expecting a pause in rate hikes, but the Fed is determined to bring inflation back down to the 2% level, no matter what. A decision would be made after the Federal Open Market Committee evaluates "all" the most recent data. (1) Powell may have also dashed a few hopes for rate cuts later this year. He says: "The data has continued to support the FOMC's view that bringing inflation down will take "some time" and that rate cuts simply are not part of the Fed's current forecast. But he also says that interest rates are currently high enough to slow economic growth, and hopefully tamp down inflation without further credit tightening. Meantime, the U.S. leading economic index, or LEI, shows a decline in April, for the 13th month in a row. The declines have pointed toward a potential recession, but so far, that hasn't happened. The index was down .6% last month with eight of the ten economic indicators showing a decline. (2) Initial jobless claims were down last week, thanks to an effort in Massachusetts to reduce fraudulent claims. They fell from 264,000 the previous week to 242,000 last week. Overall, they have been slowly rising since January. The number of continuing claims was also down by about 8,000 with about 1.8 million people collecting benefits. (3) New home construction was higher in April, thanks to an outsized demand among consumers, despite high interest rates. The government says they rose 2.2% for the month with more activity in the Midwest and the West. That's for both multi-family construction, which was up 5.2%, and single-family, which was up 1.6%. Building permits were down, however, by 1.5%. (4) The home builders confidence index also reflected a positive outlook among builders. The National Association of Home Builders say the index was up five points to a central balance point of 50 in May. Anything above 50 is positive, and below 50, negative. The reading for May is the first time it's been out of negative territory in almost a year. (5) The latest report for existing home sales is for February, and according to the National Association of Realtors, it surged 14.5% as interest rates experienced a temporary dip. It was the biggest monthly increase since July of 2020 when sales skyrocketed 22.4%. NAR says that single-family sales are currently at their highest level since the association started tracking them in 1999. (6) Mortgage Rates Mortgage rates are still moving sideways. Freddie Mac says the 30-year fixed-rate mortgage was up just 4 basis points, to 6.39%. The 15-year was unchanged at 5.75%. (7) In other news making headlines... FHFA Rescinds New DTI Fee Structure The FHFA is rethinking its controversial new up-front fee structure for single-family home loans which placed more importance on a borrower's debt-to-income ratio than it did on credit score. The government finance agency has now rescinded the new fee structure for Fannie and Freddie loans, and is asking for input on the goals and policy priorities that the FHFA should pursue in regards to an upgrade of the pricing framework. (8) When the FHFA announced the previously upgraded pricing structure, there was an outcry from real estate organizations, including the Mortgage Bankers Association, the National Association of Realtors, and others. It kinda blew up in the media, because it appeared to raise the fees for people with higher credit scores while lowering fees for low income borrowers, and gave the appearance of an unfair fee subsidy. The FHFA denies that the fee structure was based on the idea of a subsidy. But it is now accepting feedback from the public on how to adjust the fee structure to better reflect loan risk in order to protect Fannie and Freddie against those risks, and without unnecessary expense for borrowers, especially those struggling with affordability issues. Mall Owners Filling Empty Stores with Pickleball Courts! Mall owners have a new strategy to fill vacant stores and attract more people. They are turning to the fast-growing sport of pickleball, and replacing shuttered stores like Bed, Bath, and Beyond with pickleball courts! (9) The combination satisfies a need on both sides as consumers gravitate toward locations that offer fun, social experiences and not just a place to sh

A Senate hearing on recent bank failures turned into a prickly confrontation between bank executives and lawmakers. Former leadership for Silicon Valley, Signature, and First Republic Banks were hammered by lawmakers about why their banks collapsed. And there wasn't a lot of agreement on the cause. Bank executives blamed the government and the media, while lawmakers blamed mismanagement and greed. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Silicon Valley Bank made the biggest splash as the first bank to fall with about $210 billion in assets. Signature bank had about $110 billion when it was seized by regulators. They were the third and fourth largest banks in the U.S. so their failures raised huge concerns about the impact on the entire financial system. First Republic went south and teetered for a few months after it lost billions in deposits, and was largely taken over by JPMorgan. SVB CEO Blamed a Series of "Unprecedented Events" In a joint session before the Senate Banking Committee, former Silicon Valley Bank CEO Greg Becker pointed a finger at the federal government, saying the bank's failure was the result of a series of "unprecedented events." He testified that: "With near zero-percent interest rates and the largest government sponsored economic stimulus in history, more than $5 trillion in new deposits flooded into commercial banks. By the end of 2020, SBV had grown 63 percent over the prior year, and in 2021, SVB's assets grew another 83 percent to $212 billion." (1) He also pointed out that during the pandemic, when inflation started to become an issue, the Federal Reserve insisted that inflation was "transitory" and that interest rates would remain low. Massive Bank Run at SVB The bank's collapse largely happened after a decision to invest more than half of the bank's loan portfolio into fixed-income Treasury securities, when interest rates were low. They are considered "low risk" but they are also impacted by interest rate hikes. When interest rates blew up to fight inflation, the value of SVB's portfolio shrank and that forced the bank to sell at a $2 billion loss. When news spread about the bank's situation, depositors became concerned about accessing their funds and the bank experienced a massive bank run. Media Misconceptions Becker also blamed the media for comparing the March 8th failure of Silvergate Bank to Silicon Valley Bank. He told lawmakers that the two banks had completely different business models, and said: "Rumors and misconceptions quickly spread online, culminating on March 9th with the first-ever social media bank run leading to more than $42 billion in deposits being withdrawn from SVB in 10 hours, or $1 million every second." Two More Dominoes to Fall Former Signature Bank Chairman Scott Shay was miffed that his bank was seized by New York State regulators on March 12th. He insisted that the bank would have survived that bank run. He argued: "We were at all times solvent and well-capitalized, and even with the sale of our available-for-sale securities, we still would have remained well capitalized." Former First Republic CEO Mike Roffler also blamed social media and news stories for inciting panic among depositors along with technology that allows for fast-paced digital withdrawals. Roffler told lawmakers: "The contagion spread very quickly and panic is very hard to control." (2) Lawmakers Blame Mismanagement, Greed But lawmakers also took the conversation in a different direction, criticizing bank leaders for millions of dollars in bonuses and personal stock sales ahead of the failures. Senator Sherrod Brown ripped into Becker saying: "Workers face consequences, executives ride off into the sunset. Only in corporate boardrooms can you run your business into the ground, take the whole economy along with you and come out ahead. We can't let that happen again." Some lawmakers said that bank executives could have reduced the risk by hedging their portfolios, but that they, instead, placed profits ahead of safety. As explained in a Washington Post article, Silicon Valley Bank had financed short-term liabilities with long-term debt. It seemed like a no-brainer when interest rates were low, and to be fair, there was a lot of talk about interest rates remaining low for a very long time. But when the Fed started hiking rates, the value of those Treasurys went down. Lawmakers say the bank could have swapped those longer-term notes for one with shorter-terms that match the duration of the bank's liabilities. But they say the banks didn't do that because it would have been more expensive. (3) Sharp Words from Some Senators The session became downright nasty at times. Senator John Kenney of Louisiana had sharp words for what he called SVB's "stupidity." He told Becker: "You made a really stupid bet that went bad, didn't ya? And the taxpayers of America had to pick up the tab for your stupidity,

In this Real Estate News Brief for the week ending May 13th, 2023... some good news about inflation, how a U.S. debt default might impact housing, and a new Gallup Poll on investor preferences. 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 two inflation reports from this past week. The first was a report on the Consumer Price Index for April. The CPI shows a .4% rise in consumer prices which is a slight increase from the previous month, but it brought the annual rate below 5% for the first time in two years. It hit a high of 9.1% last summer, but is now down to 4.9%. The core rate, which omits food and fuel, was also down .4%, with an annual rate of 5.5%. Shelter prices rose the most, but those prices are slowing down. It's interesting to note that the three-month annualized rate is now at 3.2%. (1) Producer prices are also coming down. The Labor Department reported a .2% increase in the Producer Price Index for April, with an annual rate of 2.3%. The PPI's core rate was also down .2% but the annual rate is a bit higher, at 3.4%. As MarketWatch reports: "Inflation is moderating at the consumer and producer levels. This is adding to market expectations that the Federal Reserve will refrain from raising interest rates further at the next meeting in mid-June." (2) The Fed's preferred report on inflation, known as the Personal Consumption Expenditure Index or PCE, will play a big role in what the Fed does next. That's coming out at the end of this month. Weekly jobless claims were a surprise on the upside, with 240,000 people filing for benefits. They were 22,000 higher than they were for the previous week. Economists had only expected an increase of 3,000. That's the highest number of claims since October of 2021. The numbers have been steadily rising since January, for a total of 1.81 million continuing claims. Higher numbers indicate a softening of the job market and slower wage growth which the Fed wants to see in its fight against inflation. (3) Mortgage Rates Mortgage rates are still idling in the lower 6% range. Freddie Mac says the 30-year fixed-rate mortgage was down four basis points to 6.35% this last week. The 15-year was down one point to 5.75%. (4) Freddie Mac's chief economist, Sam Khater, says: "A recent sideways trend in mortgage rates is a welcome departure from the record increases of last year." (5) In other news making headlines… Mortgage Rates Would Skyrocket if U.S. Defaults on Debt As lawmakers haggle over the debt ceiling, there's concern about what would happen if they don't come to an agreement and the government defaults. According to Zillow, it would have a devastating impact on the housing market, with mortgage rates potentially rising to 8.4%. That would increase a typical mortgage payment by 22%. (6) Zillow says if mortgage rates get to the 8% level, existing home sales could fall from April's 4.3 million to around 3.3 million in September. That's a 23% drop. Zillow's senior economist, Jeff Tucker, acknowledges that a default is "unlikely" but if it did happen, he says it would send the housing market into a "deep freeze." It is hoped that President Joe Biden and Speaker of the House Kevin McCarthy will hammer out a deal by June 1st. In a Bloomberg interview, Treasury Secretary Janet Yellen said: "There is no satisfactory solution for the U.S. that's good for the economy and financial markets other than Congress acting to raise the debt ceiling." Fed's Rate Hikes Are Now Hurting the Housing Market Housing economists are not happy about the latest rate hike. The Fed hiked short-term rates another quarter point to a range of 5 to 5.25%. The National Association of Realtors' Lawrence Yun and the National Association of Home Builders' Robert Dietz call it "disappointing." They say the high rates are freezing loan activity and hurting the economy. (7) They say that consumer prices have been coming down for months and the last rate hike wasn't necessary. Yun says that: "Regional banks are an important source of loans – but they are frozen." He says: "They are shuffling their balance sheets and figuring out what to do." Dietz says that higher rates are making it harder for developers to build homes, which are badly needed to boost inventory. He says: "We need to be building more than 1.1 million homes a year to haVe a meaningful impact on the lack of inventory." Real Estate Still a Top Investment Choice, but Lead is Shrinking A recent Gallup poll shows that real estate is still a top investment choice, but the lead is shrinking. In 2022, 45% of the participants said that real estate is the best long-term investment. This year, that percentage shrank to just 34%. (8) Many consumers have turned to gold, which has now taken second place and pushed stocks into third. Gold was favored by 26% this year, compared to 15% last year. Stocks dropped from 24% last year to 18% this year. S

In this Real Estate News Brief for the week ending May 6th, 2023… why economists are expecting a rate hike pause, where homeowners are paying the most and the least for their mortgages, and new home search help from a chatbot! 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 big news is, of course, the Fed's rate hike. The Federal Reserve's Open Market Committee followed through on an expected quarter point hike to the overnight lending rate, which puts the target range between 5 and 5.25%. It was the 10th rate hike in a row and a unanimous decision among committee members, despite calls for a pause from some Congressional lawmakers. (1) The Fed also appeared to suggest that it might now be time for a pause, by eliminating a sentence that says "some" additional rate hikes may be needed. Instead, the statement kind of hedged on the idea of rate hikes by saying that any further rate hikes would depend on "the cumulative tightening of monetary policy, the lags with which monetary policy affect economic activity and inflation, and economic and financial developments." Economists are interpreting that to mean that the Fed is prepared to take a more "dovish" approach at its next policy meeting. As MarketWatch puts it, the Fed is "on hold." Fed Chief Jerome Powell also said in his press conference after the meeting that: "We are no longer saying we anticipate" rate hikes. He says: "We will be driven by incoming data, meeting by meeting." (2) Some economists say the Fed has already gone too far. Chief economist for the National Association of Realtors, Lawrence Yun, is one of them. He called last week's rate hike "unnecessary and harmful." Yun says inflation has been coming down and will continue to do so. He says: "It will be even lower as the heavyweight component to inflation, which is rent, will inevitably slow down given the robust, 40-year high in construction of new apartment units." He also says that many small banks are struggling right now. He says: "They are becoming zombie-like banks, unable to lend even to good businesses, as they are more concerned with balance sheet shuffling for survival." (3) Meanwhile, there are new signs that the job market is softening. Initial claims were up 13,000 to a total of 242,000. That's up from about 200,000 in January. Continuing claims were down, however, by 38,000 to a total of 1.81 million. (4) The April jobs report also shows that the job market is still going strong. It shows that companies increased the number of available positions by 253,000. Wall Street economists had anticipated the addition of just 180,000 new jobs. The unemployment rate also declined from 3.5% to 3.4%. (5) Mortgage Rates Mortgage rates dipped a little this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down four basic points to 6.39%. The 15-year was up five points to 5.76%. (6) In other news making headlines… The Average Monthly Mortgage Payment The average monthly mortgage payment is now $2,317. Lending Tree's latest study shows that the average U.S. home buyer needs a mortgage of $333,342 with the highest amounts needed in the District of Columbia, Washington State, and California. (7) High priced states skew the averages however, so you need to look at the individual states to see how affordable they are. The three states with the lowest average mortgage amounts are West Virginia, Kentucky, and Michigan. In West Virginia, the average is just $1,700. Homeownership Not a Priority Among Most Renters A majority of renters don't see homeownership in their future. Online brokerage Home Bay conducted a survey that shows about two-thirds say they have lost hope in owning a home, although half of the respondents said that homeownership is "very important." Given their current situation, they'd prefer to spend their money on other things. The top three priorities are paying down debt, having a comfortable retirement, and owning a car. (8) Among the renters who want to own a home, a third are willing to pay a high price to do that including many who said they'd skip meals or sell their plasma. Two thirds also said they would take on a second job. Zillow, Redfin Launch ChatGPT Plugin Searching for a home could get a little easier with the help of a chatbot. Both Zillow and Redfin announced that users will be able to get a ChatGPT plugin that will allow them to describe homes and have the chatbot show relevant listings. The OpenAI website says that only a small number of users have access to the plugins right now, but you can add your name to a waitlist. (9) That's it for this week's News Brief. Check the show notes for links at newsforinvestors.com. You can also join RealWealth while you are at our website by hitting the "join for free" button. Membership gives you full access to our Investor Portal where you can see sample

When it comes to renting a home, landlords may see many more applicants with pets than they do parents with children. According to the U.S. Census Bureau, the number of households with pets is almost double the number of households with children. That's a trend that impacts the rental market as well as the home buying market, as pet owners look for housing and neighborhoods that will accommodate the needs of their children, and their pets. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Census data shows that the number of families with kids under the age of 18 has been declining over the past 20 years. Last year, in 2022, just 40% of households had children. That's down from 48% in 2002. A RisMedia article suggests two reasons for the decline: One, because birth rates have been shrinking over the last few decades, except for an increase in just the last year; And two, because baby boomers still comprise a large share of U.S. households, but at this point, with no kids. Pet Households Rise and Kid Households Decline As households with children have dwindled, those with pets have been rising. The American Pet Products Association says that, back in 1988, 56% of households had a pet which was most likely a dog or a cat. Today, about 70% of U.S. households have pets. Although the number has been steadily rising over the years, many people adopted pets during the pandemic and continue to lavish time and money on their pet companions. The BLS American Time Survey shows that the share of Americans who spend daily time with their pets grew from about 13% in 2003 to almost 20% in 2021, with women spending more time on pets than the men. Americans are also spending more money on their pets. The American Pet Products Association says the expenditure has grown from about $53 billion in 2012 to $123 billion in 2021. The Importance of Pets in Real Estate Decisions With that kind of time and money being lavished on our pet companions, it's not that surprising to think that pet owners will place great importance on the well-being of their pets in their home buying process or their rental decisions. According to the National Association of Realtors, almost one-third of unmarried homebuyers will consider their pet when they decide on a neighborhood. About 14% of married couples will factor that in. When it comes to gender, 25% of single women want a pet-friendly neighborhood compared to 16% of men. Pet friendly neighborhoods are ones with a high walkability score, access to parks and recreation areas, and homes with bigger yards. Renting to Tenants with Pets As a landlord, it has become more important to accommodate pets, but you should also have clear, comprehensive rules written into the lease agreement. The California Apartment Association offers a Pet Addendum that can help landlords and property managers protect their property and the safety and cleanliness of their rental community in general. Among the key components of the addendum is a requirement that renters get a landlord's written consent before they bring a pet onto the premises. The addendum also requires detailed information about the pet including type, breed, name, sex, age, size, and a description or photograph. This can help with record-keeping. If there are local pet ordinances, the tenant should agree to comply with those. There should also be guidelines for the disposal of any pet waste on the rental property and the maintenance of litter boxes. We'll have a link to the addendum, and the data on households with children and pets in the show notes at newsforinvestors.com. I also ask that listeners become RealWealth members to find out more about the creation of rental property income. It's free to join at our website. And please remember to subscribe to this podcast! Thanks for listening! Kathy Fettke Links: 1 - https://www.rismedia.com/2023/05/08/stunning-stat-more-pets-than-kids-home/ 2 - https://caanet.org/allowing-a-pet-be-sure-to-use-caas-pet-addendum/

March wasn't a great month for investor home sales. A new Redfin report shows that one in every seven homes sold by investors was sold at a loss. That's 14% of investor sales or about triple the number from a year earlier, and the highest level of investor home sale losses since 2016. But there is a catch! These sales were mostly for investors who bought more recently and sold after a short length of time, such as flippers. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The housing market has slowed dramatically as home prices and mortgage rates make it tough to buy, and in some areas and for some people, tough to invest. It's important to remember that the report is based on national statistics, and that six in seven of those real estate investors made money on sales, although their gains may have been smaller. Typical Gains for Investor Home Sales Redfin says the typical investor who sold a home in March, sold it for about 46% more than they paid. That's down from a little over 55% in March of last year. Profit will likely be less than that, because of other costs, like renovations. Redfin Senior Economist Sheharyar Bokhari says: "You might wonder why investors don't just wait to sell until the housing market bounces back. Many long-term investors who rent their properties are doing that, but many flippers–especially those who bought recently–can't afford to." She says: "Holding onto homes that aren't producing income can be expensive because the owner is on the hook for property taxes, operating costs, and in many cases, mortgage payments." Phoenix Redfin agent Van Welborn says: "Home flippers aren't reaping the gains they used to." Flippers More Likely to Report Losses If you narrow the overall results of the Redfin study down to "just" flippers, Redfin says that one in five sold at a loss in March. Redfin defines a flipper as someone who bought and sold a home within a nine-month time frame. Holding long-term will likely produce much better results, although the median U.S. asking rent has been slowing. It was down .4% year-over-year in March but that is also the first time it's gone down in three years. Redfin agents say that Airbnb operators are also hurting in some markets, and have had to sell. Flippers Lose More in Pandemic Boomtowns Places where investors are more likely to sell at a loss are the pandemic boomtowns like Phoenix and Las Vegas. In Phoenix, 31% sold at a loss in March. In Las Vegas, that percentage was more like 28%. The report says that many of the sellers are mom-and-pop investors who are worried about where the market is headed, possibly remembering what happened in 2008. But today's housing market is nothing like it was in 2008, and real estate is still a solid investment over the long term. Many institutional investors see it that way. Instead of selling, many are holding on to their properties and waiting for buying opportunities. My Formula for Real Estate Wealth Redfin says that 10% of the homes on the market right now are for sale by investors. That's higher than at any time before or during the pandemic but down from a peak of 12.4% last year. My formula for real estate wealth is to buy wisely and hold on to your properties long-term, especially now when there's such strong demand for single-family rentals. At RealWealth we encourage the use of a platform called DealCheck for a thorough analysis of a deal before you close on it. DealCheck is a powerful property analysis platform that's easy to use, and provides instant details on a property's cash flow, cap rate, ROI, profit from a sale, acquisition cost, and other helpful information. If you're a RealWealth member, just sign into the portal and look for DealCheck under the Resources tab. If you aren't a member, it's free and easy to sign up. And, please remember to subscribe to this podcast! Thanks for listening! Kathy Links: 1 - https://www.redfin.com/news/homeowner-tenure-2022/

In this Real Estate News Brief for the week ending April 29th, 2023... you'll get mixed news on inflation, results for the first quarter GDP, and a rate hike in South America that you never want to see here! 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 Let's begin our economic review with the latest inflation report. The Personal Consumption Expenditure Index for March was released on Friday and showed a tiny .1% increase in overall inflation. That brought the yearly rate down from 5.1% in February to 4.2% in March – the lowest it's been since May of last year. But unfortunately, the news wasn't as good for the PCE's core rate. When you omit prices for food and gas, the core rate rose .3%, and brought the annual rate down from 4.7% to 4.6%. As MarketWatch reports, the core rate hasn't changed much for the last five months. (1) The PCE is the Fed's preferred inflation gauge, and will be an important factor in determining whether to hike interest rates again this week. It's generally believed that the central bank will hike rates another quarter point, but it's a delicate situation because the economy is teetering on the brink of a recession. As Bill Adams of Comerica told MarketWatch: "The Fed is stuck between raising interest rates and likely pushing the economy into a recession… or pausing and risking that inflation accelerates in a few quarters if the economy regains momentum and sticky prices stay high." First quarter GDP is out. It shows the economy grew at a rate of 1.1%. That's down from a GDP of 2.6% in the fourth quarter. Consumer spending has been strong, but was offset by spending cautiousness among businesses. Home construction and sales are also a drag on the GDP, thanks to higher mortgage rates. But MarketWatch says the biggest impact on the GDP was a lack of inventory growth. Business inventories were down $138 Billion. If that had not been the case, and inventory growth remained flat, the GDP would have reportedly been much higher, at 3.4%. (2) Jobless claims reversed course this last week and fell an unexpected 16,000 to a seasonally adjusted 230,000. Economists had expected them to rise slightly. The report shows that the job market is still strong, which feeds into the Fed's concern about inflation. Continuing claims were also down 3,000 to 1.86 million. (3) Housing demand and a lack of existing home inventory drove new home sales higher in March, despite high mortgage rates. The Commerce Department says they were up 9.6% for the month, to a seasonally adjusted annual rate of 683,000. The surge was mostly driven by new home sales in the Northeast. The median price for a home was $449,800. Chief Economist, Lisa Sturtevant, at Bright MLS, says that about one in three homes for sale are new builds. Historically, it's more like one in 10. (4) Although the sale of existing homes has been rising over the last several months, they fell in March. The National Association of Realtors says contract signings were down 5.2% for the month which is more than economists had predicted. NAR says about a third of the listings are seeing multiple bids, and 28% are selling for more than the asking price. (5) The February report on home prices by Case Schiller shows the national index was up .2% for the month, and 2% for the year. That's the smallest increase in home price growth since 2012. (6) Mortgage Rates NAR says that realtors are predicting that mortgage rates will hit 6% this year, and 5.6% next year. But they aren't there yet. Freddie Mac says the average 30-year fixed rate mortgage was up 4 basis points this last week, to 6.43%. The 15-year was down 5 points to 5.71%. (7) In other news making headlines… Study: Home Demand Rises After Periods of High Inflation The desire to own a home will likely increase thanks to inflation. The results of a new study by UC San Diego show that the inflation we're seeing today will have a lasting impact on the housing market, with many people buying homes to protect themselves from future price growth. The study claims to be the first of its kind to show that personal experience with inflation will lead to home ownership. (8) One of the study co-authors says: "We think one reason people choose to buy instead of rent is because they are worried about future inflation, which may drive up both rent and house prices." She says: "Our paper suggests that cohorts living through the current inflationary period will have a higher demand for housing for years to come." Huge Rate Hike in Argentina as Inflation Soars As the American consumer worries about inflation and another rate hike when the Fed meets this week, consider this: The Argentina central bank just hiked short-term rates 300 basis points to an annual rate of 81%! That's in response to surging inflation that hit 104% in March. Argentine officials had hoped to cut rates this year after a difficult tightening cycle in 202

Fannie and Freddie are changing some rules that could make home loans more expensive for people with high credit scores, and less expensive for those at the low-end of that spectrum. Critics say the rules amount to an unfair subsidy for high-risk borrowers, but the GSE's say it's a misconception about what they are changing. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. You may have seen the headlines already. One says: "A Bigger Subsidy for Risky Mortgages." Another says: "Upside Down Mortgage Policy." Another says this new policy will "screw Up the Homebuying Market." The headlines refer to a new rules from the Federal Housing Finance Agency regarding loan-level price adjustments or LLPAs for conventional loans. They officially kick in on May 1st, although some lenders have already been incorporating them into their fee structures. What's an LLPA? If you have a mortgage that's backed by Fannie or Freddie, you have paid or are paying this fee. LLPAS are fees that the government-sponsored enterprises charge when they buy loans from lenders. The fee is passed on to borrowers as a percentage of the loan and the amount is based on the borrower's risk factors such as credit score and down payment. People with higher risk factors pay higher LLPAs, and they can be paid up front or with higher monthly mortgage payments. Business Insider offers a few examples of how the new pricing structure will impact borrowers. 1 - Someone who might see an increase could have a credit score of 700 with a 20% down payment for a $300,000 loan. They would have previously paid 1.25% of that loan amount or $3,750. With the new fee structure, they'd pay 1.375% or $4,125, which is an increase of $375. (1) 2 - Someone who might see a decrease could have a credit score of 780 but a down payment of just 3%. Previously, they would have paid .75% on a $300,000 loan or $2,250. With the new rules, they'd pay .135% or $375. That's a $1,875 reduction. NAR, NAHB Opposed to the New Rule The National Association of Realtors is among those criticizing the rule change. It is encouraging the FHFA to rescind the new rule especially given the affordability issues facing home buyers. It suggests instead that: "The GSEs could simply reduce the fees for (higher risk) borrowers and maintain the others at the same cost—especially given the sharp decline in affordability over the last year." (2) National Association of Home Builders CEO, Jerry Howard, told Newsweek: "In the short term, this may increase homeownership among the targeted group, but I'm afraid it could decrease homeownership among the middle class. I'm not sure that we're not robbing Peter to pay Paul here." (3) FHFA Defends New Rules FHFA Director Sandra Thompson issued a press release this week to "set the record straight." She says: "Much of what has been reported advances a fundamental misunderstanding about the fees charged by the GSEs and why they were updated." She says the pricing structure hadn't been updated for many years, and the new pricing structure is the result of a 2021 review. (4) The goal: "To maintain support for purchase borrowers limited by income or wealth, ensure a level playing field for large and small lenders, foster capital accumulation at the Enterprises, and achieve commercially viable returns on capital over time." The overhaul has been done in steps over the last 18 months, beginning with fee increases for loans on second homes, high balance loans, and cash-out refi's. Then some fees were eliminated for first-time homebuyers with lower incomes but the means to meet their loan obligations. She says in her statement that this latest step is a recalibration of upfront tees that will make the housing finance system more resilient. Among the misconceptions, she says: 1 - Stronger credit borrowers are not subsidizing weak credit borrowers. She claims that fees generally increase for lower credit scores, despite the down payment. 2 - She says the new fee structure does not raise the fees for all low-risk borrowers. She says many borrowers with high credit scores or high down payments will see no change in their fees or even a decrease. 3 - She says the old framework was not perfectly calibrated to risk. She says it was essentially outdated, and is now better aligned for the performance of a mortgage relative to its risk. 4 - The new rules do not encourage low-income borrowers to pay a lower down payment to benefit from lower fees because they will also have to pay mortgage insurance premiums. 5 - The elimination of upfront fees is not for people with lower credit scores but for borrowers with lower incomes, and she says they are essentially supported by the loan fees for second homes and cash-out refi's (and not by good credit, high down payment borrowers). 6 - The changes are not intended to stimulate mortgage demand, but rather to advance the soundness and safety of the GSE's. The o

In this Real Estate News Brief for the week ending April 22nd, 2023… we have two new forecasts on whether we'll see a recession this year, some good news about the cost of construction materials, and a report that shows how much wealthier you are if you own instead of rent. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with a look at economic news from the past week. There are a few new reports predicting that we'll have a "mild" recession in the second half of the year. The Conference Board's leading economic indicator index, or LEI, was down for a 12th month in a row in March. It fell 1.2%, which is the biggest decline in the last three years, according to MarketWatch. The index is a compilation of 10 indicators. One Conference Board manager says: "Economic weakness will intensify and spread more widely throughout the U.S. economy over the coming months, leading to a recession starting in mid-2023." (1) Fannie Mae economists are also predicting a recession later this year. The GSE's Economic and Strategic Research Group says the economy is "running out of steam." Although the economy got off to a strong start this year, the ESR group expects to see an economic contraction during the second half of 2023. Fannie Mae's chief economist Doug Duncan, says: "The economic slowdown has resumed – whether the end result is a modest recession or simply a soft landing remains unanswered." He attributes much of his optimism to the strength of the housing market, saying: "The greater-than-expected resilience of the housing sector to the affordability pressures of higher home prices and mortgage rates is central to our expectation that the recession will be modest." (2) The Labor Department reported another weekly increase in jobless applications, which are now at their highest level since the end of 2021. Initial claims were up another 5,000 to a total of 245,000. That's still an historically low number. Continuing claims also jumped a bit. They were up 61,000 to a total of 1.87 million. (3) Housing starts were down .8% in March, to a rate of 1.52 million. The drop is mostly due to a slowdown in condo construction which fell 6.7%. Starts for single-family homes offset that a bit with an increase of 2.7%. Permits for single-family homes were also higher, by 4.1% while permits for multi-family buildings were down almost 25%. The pullback in apartment construction follows a red-hot building streak over the last several months. (4) Builders are feeling more confident about the market as demand grows for new homes. The National Association of Home Builders says its monthly confidence index was up one point to 45 in April. It's the fourth month that the index has gone higher, and it's now the strongest it's been since September of last year. Demand is strong because the inventory for existing homes is so low. (5) Meantime, existing home sales were down 2.4% in March, to an annual rate of 4.44 million. Compared with March of last year, they are down 22%. Prices are also falling which means that current homeowners would lose some of their equity if they sold now. The National Association of Realtors says that prices were down 1% in March, which is the biggest monthly drop in a decade. That's a national number. A recent report from Black Knight says that prices are falling in the West but rising in the East. Prices are falling the most in cities that experienced a pandemic housing market boom. (6) (7) Mortgage Rates Mortgage rates started rising again this last week. Freddie Mac says the average 30-year fixed-rate mortgage was up 12 basis points to 3.69%. The 15-year was up 22 points to 5.76%. (8) In other news making headlines… Prices Dipping for Construction Materials Prices for construction materials are finally coming back to earth. According to an analysis by the Associated Builders and Contractors group, they are lower today than they were a year ago. It's the first year-over-year decrease we've seen in more than 18 months. Construction Dive says that building costs are still almost 40% higher than they were right before the pandemic struck. (9) Costs for some individual construction materials remain high, however. Bisnow reports that concrete is up 14.5% from a year ago. Construction machinery and equipment is also about 12% higher. Prices are also fluctuating a lot from month to month. Chief Economist Ken Simonson for the Association General Contractors of America told Construction Dive that: "Contractors remain wary about committing to projects" because of the price volatility. Some contractors are also putting the brakes on hiring. The Bureau of Labor Statistics reports a 50% drop in construction job openings at the start of this year. Homeowner vs. Renter Wealth Report Many homeowners are becoming much wealthier than renters, thanks to an increase in their home equity. A study by the National Association of Realt

Fannie and Freddie have a growing blacklist for certain properties that they won't lend to, but it's not public and it could surprise you when you're trying to close on a deal. The Los Angeles Daily News first reported on this, saying the government-sponsored enterprises are placing condos, associations, and co-ops on the list for a variety of reasons, including deferred maintenance. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The president of Philadelphia-based condo and co-op lending service provider CondoTek told the Daily News that the blacklist has now grown to more than 1,400 properties. Orest Tomaselli says just 16 months ago, there were only 900 properties on the list. New Tighter Standards After Condo Collapse Fannie Mae and Freddie Mac tightened their standards after the collapse of Champlain Towers South in Surfside, Florida. The catastrophic failure of the 12-story condo building resulted in the deaths of 98 people and $1B in property losses. HOAs started seeing a new questionnaire months later at the beginning of last year. According to the Daily News, Fannie and Freddie are using data from this questionnaire to determine whether a property has deferred maintenance, structural issues, or a lack of funds or insurance to cover needed upgrades or repairs. Concerns That Questionnaire Creates Liability The questionnaire has been controversial. Other than questions regarding maintenance and upkeep, they also include questions that could presume future liability for any deficiencies – questions like: "Is the HOA or Cooperative Corporation aware of any deficiencies related to the safety, soundness, structural integrity, or habitability of the project's buildings?" The Orange County Register reported on a survey by the Community Associations Institute that shows 89% of the participants felt they might be held liable in the future because of questions they didn't know how to answer. Almost as many also feared liability exposure because they refused to answer those questions. (2) News reports say that some condo associations and property management companies feel the questionnaires are "draconian" and have chosen instead to boycott Fannie/Freddie loans. Questionnaire Alternative Not Well Received The mortgage giants are offering an alternative although that hasn't gotten a great reception either. Instead of the questionnaire, the underwriter can provide reviews of board minutes from HOA meetings, engineering inspections, and local government inspections. Lenders weren't thrilled with that option because it could expose the lender to future liability issues. Mortgage broker Jeff Lazerson says in the Orange County Register article, that 50% of the loans that his shop runs through Fannie and Freddie require a limited review and a shorter list of HOA questions. A Freddie Mac spokesperson says that: "Freddie Mac's requirements are designed to help ensure residential buildings with aging infrastructure are safe for their residents and the condos and co-ops needing critical repairs have a plan to do so." Safety is of utmost importance, but with affordable housing in short supply, the questionnaire and the blacklist add two more obstacles for homebuyers looking for a lower price tag. Secret Blacklist for Lenders & Servicers As for the blacklist, it's reportedly available to lenders and servicers, but not the property owners or the public in general which includes potential buyers. That means buyers counting on a loan from Fannie or Freddie might not find out until the last minute. Tomaselli says: "It's a crapshoot. The only way for you to find out if a project is on that list is if you apply for a mortgage and the lender runs that project to see if it's unavailable. And only then, typically, is the buyer informed." Buyers must then turn to riskier, more expensive mortgages to complete their transaction. You'll find links to articles about the blacklist and the HOA questionnaire at newsforinvestors.com. As always, I ask that you join RealWealth for free to learn more about real estate, and subscribe to this podcast! We'd also appreciate a review on whatever podcast platform you are using. Thank you! And thanks for listening, Kathy Fettke Links: 1 - https://www.bisnow.com/national/news/capital-markets/secret-blacklist-of-condos-co-ops-means-some-buyers-ineligible-for-fannie-freddie-financing-118544 2 - https://www.ocregister.com/2022/02/24/condo-questionnaire-causing-some-boards-to-boycott-fannie-freddie-financing/

Is climate change creating a real estate bubble we shouldn't ignore? And who's going to get hurt if that bubble bursts? Yale's Climate Connections newsletter just reported on a study that claims there's a massive bubble forming because property values don't include climate risks like flooding and wildfires. The 2023 Nature Climate Change study also suggests six ways to reduce this risk and potentially keep this bubble from bursting. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Although climate change skeptics may feel we are experiencing normal weather patterns, many people are concerned that severe weather events are increasing in number and intensity. We've been seeing increased storm-related flooding in some areas and more drought-related wildfires in others. Some inland areas are also dealing with water scarcity and extreme heat while coastal areas are faced with the threat of rising sea levels. The "Brittleness Bubble" The Yale newsletter cited climate futurist Alex Steffen for his definition of the so-called "Brittleness Bubble." Steffen says: "As awareness of risk grows, the financial value of risky places drops. Where meeting that risk is more expensive than decision-makers think a place is worth, it simply won't be defended. It will be abandoned." He says: "That will then create more problems. Bonds for big projects, loans and mortgages, business investment, insurance, talented workers – all will grow more scarce. Then, values will crash." Overvaluation of Homes The Nature Climate Change study pegged the overvaluation of U.S. homes in flood zones at around $200 billion, but a study done last year by consulting firm Milliman had a much higher number. In the Milliman study, researchers calculated the overvaluation at more like $500 billion. These figures apply to flood risk, and don't account for the impact of other weather-related risks like wildfires. California is suffering the impact of highly destructive wildfires that have been increasing in number and intensity. And that's pushing up insurance rates, making it unaffordable for many people to rebuild or buy homes in high-risk areas. The Southwest has also been dealing with a long-time drought although recent winter rains have helped to replenish reservoirs. But water scarcity and extreme heat are a growing problem in many areas. Reducing the Risk The report goes on to list six ways to help prevent this bubble from bursting, which I will briefly share with you. 1 - The first is to require sellers to fully disclose flood risks. The study says that, in general, properties that are highly overvalued are in coastal counties which often don't require flood-risk disclosures. Some property listing websites will show you this info however, such as Redfin and Realtor.com. Floodfactor.com also provides property-specific risk ratings. 2 - The second suggestion is to raise awareness about climate change which might lead to policy changes about development in risky areas. This will likely happen as more people suffer the impact and media attention grows. 3 - Third on the list of suggestions is to charge market-based insurance rates instead of subsidized rates provided by the National Flood Insurance Program. The NFIP has issued new risk ratings called Risk Rating 2.0. That has brought insurance costs closer to what they need to be, but it's a slow-going process because there are yearly rate-hike caps. 4 - The fourth suggestion is to reduce federal subsidies for properties in risky areas. These subsidies come in the form of supplemental disaster relief with no requirements for long-term flood-risk strategies. The study authors say it's a complex issue that will take a lot of effort to tackle because there isn't much political support or funding to get this done. 5 - Fifth on the list of actions to address the so-called climate change housing bubble is a revamping of FEMA and the creation of a National Disaster Safety Board. The report says that FEMA is "underfunded, understaffed, and has minimal authority to do what it needs to do." A National Disaster Safety Board could help implement policy changes. 6 - Last but not least, the report suggests that we should work toward a retreat policy that would help people move from areas that have suffered multiple climate-related disasters. The strategy would be to provide affordable housing for these people which may sound like a "big ask" at a time when the nation is suffering from a huge lack of affordable housing. When Will the Bubble Burst? So when will all this become critical? The Yale article cites a NOAA prediction, that the average sea level rise by 2050 will be 10 to 14 inches for the East Coast, 14 to 18 inches for the Gulf Coast, and four to eight inches for the West Coast. It says a "rapid rise" will happen after that and claims that we'll see a rise of four to seven feet by 2100 as compared to the year 2000. The st

In this Real Estate News Brief for the week ending April 15th, 2023… we have two inflation reports, the minutes of the last Fed meeting, and the results of a survey on an acceptable mortgage rate. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. The government released two reports on inflation that show prices are rising more slowly, but that inflation is still too high. The Consumer Price Index or CPI shows a small .1% increase in March, mostly due to lower food and gas prices. Energy prices were down 3.5% while groceries fell .3% including an 11% tumble for egg prices. Grocery prices are still 8.4% higher year-over-year, but those declines helped slow the yearly rate from 6% to 5%, which is the lowest we've seen since May of 2021. (1) The news isn't quite as good for the core rate, which strips out food and gas. That was up .4% and "raised" the annual rate from 5.5% to 5.6%. The increase was partly caused by a 2.7% increase in shelter prices, although rents and home price growth are slowing. The Producer Price Index or PPI for March was also released, and shows a big drop in wholesale prices. That typically means we'll see retail prices coming down in the coming months. The data shows a .5% monthly decline which brings the yearly rate down from 4.9% to 2.7%. That's the lowest it's been since January of 2021. The core rate shows a slight increase of .1%. That also reduced the annual rate from 4.5% to 3.6%. (2) Meantime, the Federal Reserve released minutes from the meeting in February which resulted in a quarter-point rate hike. The notes show that Fed officials are very concerned about rate hike stress on the banking system, and are now admitting that we'll likely see at least a "mild" recession later this year. They raised the Federal Funds rate nine times in a row to a range of 4.75% to 5% at the last meeting. They believe that inflation is still much too high and that further rate hikes may be needed, but they will be looking closely at the incoming economic data ahead of their meeting in May. (3) U.S. Treasury Secretary Janet Yellen spoke out at the end of the week, saying that banks are being more cautious, and that if they tighten their lending standards further, there may be no need for further rate hikes. She said that would serve as a "substitute for further interest rate hikes that the Fed needs to make." (4) Consumers are spending less, which is another sign that the economy is softening. Retail sales have declined four out of the last five months, and were down 1% in March. As reported by MarketWatch: "Retail sales haven't fallen off a cliff, but they also aren't rising rapidly like they did in 2021 and early 2022." (5) Jobless applications are slowly rising. There were 239,000 initial claims for the previous week, which is an increase of 11,000. That's not much of a blow to the job market, but it does show that layoffs are slowly rising. Most of the unemployment applications were filed in California where big tech companies are handing out pink slips. Continuing claims are still very low at 1.81 million. (6) Mortgage Rates Mortgage rates held steady for the most part. Freddie Mac says the average 30-year fixed rate mortgage was down just one basis point to 6.27%. The 15-year was also down one point to 5.54%. (7) In other news making headlines... Mortgage Rate "Tipping Point" The National Association of Realtors is predicting they will fall below 6% by the end of the year. NAR economist Nadia Evangelou says: "If rates drop to 6%, 3.1 million more households will be able to afford to buy the median-priced home compared to the beginning of the year." A survey by John Burns Real Estate Consulting shows the "sweet spot" for most homebuyers is lower than 6%. 71% of the participants taking that survey said they won't accept anything higher than 5.5%. (8) Sharp Drop in Single-Family Permits There's been a steep drop in the number of building permits pulled for single-family homes. The National Association of Home Buliders says the they are down more than 34% year-over-year with the sharpest decrease in the West followed by the South and the Midwest. They are down about 44%, 33%, and 31% respectively. The Northeast had the smallest drop of 23%. (9) Multifamily permits are up slightly for the nation with a year-over-year rate of just over 8%. There's been a steep drop in the Northeast for apartments while they have surged to almost 32% in the South. Texas had the highest number of single-family permits, but those have dropped more than 40% in the last 12 months. Florida and North Carolina have also experienced big declines of just over 31% and 22% respectively. That's it for today. You'll find more on all these topics by following links in the show notes at newsforinvestors.com. You can also learn more about how demand is growing for single-family rentals at ou

In this Real Estate News Brief for the week ending April 8th, 2023... reports show a slowly weakening job market, what could be a great year for single-family rentals, and a list of the top metros for home value growth and stability. 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. Although the job market remains strong, the latest reports show it is softening. For the week of March 25th, jobless claims hit 228,000. It's the ninth week in a row that they've topped 200,000. They had bottomed out last fall when they dropped to a 53-year low of 182,000. They continued around the 200,000 level for several months and have been slowly rising since February. Government revisions also show that claims during the first part of the year were higher than previously reported. MarketWatch economists say that's probably due to corporate layoffs that are just now showing up in the jobless data. (1) Job openings are also declining. They fell to a 21-month low in February, which is another sign that the job market is softening. Listings dropped from 10.6 million in January to 9.9 million in February. Openings are now down to about 1.7 openings for each unemployed worker. They were at 1.9 openings or each unemployed worker previously. Bill Adams of Comerica told MarketWatch: "The labor market is still very hot but the big drop in job openings is a sign the labor market is cooling in general." (2) A third report on job growth shows that U.S. companies added 236,000 new jobs in March. That's a sign of strength and resiliency, and probably not what the Fed would like to hear. Those new jobs helped lower the unemployment rate from 3.6% to 3.5%. Wage growth was slower however. It's come down from 4.6% in February to 4.2% in March. (3) A report on construction spending shows it was down slightly in February. The Commerce Department says it fell .1% to $1.844 trillion. Single-family construction spending was down 1.8% while multi-family spending was up 1.4%. Year-over-year, multifamily is up 22.2%. Single-family is up 21.4%. (4) Mortgage Rates Mortgage rates dipped slightly this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 4 basis points to 6.28%. The 15-year was down 8 points to 5.64%. (5) In other news making headlines… Single-Family Rental Market Remains Strong Some parts of the housing market may be in for a rough ride this year, but the single-family rental market isn't one of them. A new report from Attom projected single-family rental yields for 212 counties with a population of at least 100,000. Rental yields are calculated by dividing the annualized gross rent by the purchase price. According to Attom, rentals in those 212 counties will see a 7.5% yield this year. That's up from 6.7% last year. (6) Attom says that SFR rents are growing in over 90 of the counties analyzed, so those counties will be the most desirable. Three of the top five counties for the biggest upside in rent yields are in Florida including counties for Miami, Fort Lauderdale, and West Palm Beach. California's Orange and Santa Clara counties are the other two. There's a lot of data in this report so it's worth digging deeper if you're deciding where to buy a rental property this year. You'll find a link to the report in the show notes. Texas Shows Strength for Overall Housing Market Another report on the U.S. housing market lists the top 20 cities for growth and stability, and 12 of them are in Texas. The Smart Asset study compared home value data for 400 metros between 1998 and 2022. It then calculated the growth rate from that data. (7) The Austin, Texas, area was In the number one spot for growth and stability followed by Midland, Texas, in the Western part of the state. Boulder and Fort Collins, Colorado, took the third and fourth spots. The Kennewick-Richland part of Washington State was fifth. Rapid City South Dakota took the sixth position. Then it's back to Texas with the Odessa area in West Texas as seventh and the Dallas area as eighth. San Antonio was in the ninth spot, and Houston right after that. Texas also dominated the next ten top cities as well with six more metros showing the strongest growth and stability. The report also shows the worst cities for growth and stability with Flint Michigan topping that list. I won't list those cities, but you'll find a link to the report in the show notes. Will Commercial Real Estate Go Belly Up? While there has been a lot of concern that commercial real estate is going to implode because of maturing debt and the inability to refinance at high interest rate, CNBC published a story with the title: "The coming commercial real estate crash that may never happen." This story argues that only a quarter of office-building loans will need to be refinanced in the next year. A quarter of office-buildings? That sounds like a LOT to me. CNB

Commercial real estate is feeling the impact of high interest rates, slower rent growth, and the banking turmoil, but is that asset class really set to implode? Many of the headlines you see today would lead you to believe that that's going to happen but some real estate insiders say: "Not so fast. We could be in for a buying opportunity." Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. First, let's take a look at what's happening with apartment sales. Commercial real estate data company CoStar just released a preliminary report on first quarter sales that shows a 74% year-over-year drop. That's the biggest slowdown since 2012 except for the second quarter of 2020, when the pandemic shut down the economy. From the start of the year to March 17th, sales were around $10.6 trillion. If the quarter finished with another $2.8 billion in sales, the total would be equal to the second quarter of 2020. (1) Apartment Sale Slowdowns In 2020, apartment sales fell because of the pandemic. Now, sales are slowing down because the Fed has been pushing up interest rates to fight inflation and investors can't make the numbers work. Alex Horn of CoStar News says: "The value of multifamily assets across the United States has started to decline" over the last six months. And he expects valuations to fall further. As dour as that sounds, CoStar reports that multifamily sales are doing better than other kinds of commercial real estate, such as office and industrial. CoStar's Jay Lybik says that multifamily is "still the preferred sector to invest in." But this kind of data is looking at a "national" snapshot, which doesn't say much about the submarkets, and places where things aren't quite so bad. The Basic Tenets of Real Estate Eric Brody of ANAX Ventures is one of those optimists. ANAX is a real estate developer and lender that provides funding to distressed real estate projects. Brody spoke with Benzinga about the current situation and said: "What are the basic tenets of real estate? Location, location, location and hyper-local markets. Now you have the mainstream media making projections based on a macro scale." He says that the media should be asking about what asset class in which market and how they structured the deal. (2) He also objects to stories about a big slowdown in construction that's impacting values. According to Brody, you don't count a half built building as worth only half of it's value. He says the values are still there and there's "a lot of stuff under construction right now." Maturing Debt Creates Investor Opportunities In December, he forecast big buying opportunities in commercial real estate because of all the debt that's maturing. He told GlobeSt.com that a report by Newmark shows "over $1 trillion in loans are coming due in the next two years, and due to rising interest rates, it is expected that repayment conditions will become more challenging, with bridge financing, office, and retail loans being the most at risk." He said: "In addition to the rising rates because of increased construction costs, rent growth, and political headwinds, real estate will need an infusion of capital to either refinance assets at a lower rate, pay down existing debt, or complete current projects." (3) But what does that mean for investors with capital? Brody told Benzinga that this creates an opportunistic environment for investors with cash on hand. He says: "It's an incredible moment in time if you have the capital and the expertise." That's it for a more positive view of the commercial real estate market. You'll find links to the stories I mentioned at newsforinvestors.com. You can also join RealWealth for free while you are there, if you haven't already done so. As a member, you have full access to our website, with data on individual rental markets, sample properties, and experienced investment counselors who can answer questions for qualified investors. If you haven't subscribed to the podcast, please do so! And leave us a review! Thank you! And thanks for listening, Kathy Links: 1 - https://www.costar.com/article/2111442536/us-apartment-sales-on-pace-for-the-slowest-quarter-in-more-than-a-decade 2 - https://www.benzinga.com/real-estate/23/04/31659957/is-commercial-real-estate-dead-dying-or-just-the-subject-of-media-clickbait 3 - https://www.globest.com/2022/12/19/will-investment-sales-recover-in-2023/

Demand for badly needed housing has triggered another ban on single-family zoning. Lawmakers in Arlington County, Virginia, approved a controversial plan to eliminate single-family exclusivity, and allow as many as six homes on one property. The decision came after a contentious three-year debate, and is part of a growing trend to dismantle the long-standing concept for single-family communities. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. The policy was unanimously approved by a five-member county board after a battle that included a so-called "Missing Middle Housing Study." The missing middle is a phrase that refers to housing that falls between apartments and single-family homes. It covers several kinds of housing including townhomes, duplexes, and triplexes with more space than apartments. It could also include backyard cottages or in-law units which are more officially known as accessory dwelling units or ADUs. Divisive Debate Over Single-Family Zoning Ban As reported by the Washington Post, some Arlington County residents supported the idea, saying a ban on exclusive single-family neighborhoods would increase affordable housing options and diversify their communities. Other residents argued that it would lead to overcrowding, lower property values, and the destruction of their lifestyle and neighborhoods. (1) Arlington County is a desirable part of the greater Washington, D.C. metro with a growing population and a growing demand for more housing. The county's board chair, Christian Dorsey, said the ban will help the county address population growth, and move past the "discriminatory noise" within zoning rules. He says: "Growth and change are not good or bad, they just are." And, he says: "It's our responsibility to make sure we accommodate that – to make sure that it works well for as many people as it possibly can." New Rules Among the Most Permissive in the Country The new rules are some of the most permissive in the country. Contractors will be allowed to put up to five or six homes on lots that range in size from 6 to 7,000 square feet. Smaller lots will have a limit of 4 units. Height, lot coverage, floor area, and setbacks will remain the same. According to Wikipedia, single-family zoning has been around since 1916, and began in the Elmwood neighborhood of Berkeley, California. The story goes that a real estate developer in the Elmwood district pushed for single-family zoning rules to prevent a dance company owned by a Black resident from moving into homes that he was trying to sell. He apparently pushed for single-family zoning with the help of other developers who were also trying to keep certain groups of people out of the neighborhood. Growing Opposition to Single-Family Zoning More than one hundred years later, the concept is now wavering under the weight of the housing crisis, and the idea of banning this kind of exclusive zoning is gaining momentum across the country. According to BisNow, at least three states and eight municipalities have passed bans on single-family-only zoning. The city of Minneapolis was the first to implement a ban in 2018. The state of Oregon followed in 2019. Several cities in California banned that kind of zoning, but state lawmakers approved a bill in 2019 called Senate Bill 9. That legislation makes it legal to have two units on a single-family property, and in some cases, four units. The state of Maine adopted a ban last year. The Washington State House of Representatives just recently passed a bill that would ban single-family zoning statewide, but it still needs approval from the state senate and the governor. (2) The policy in Arlington, Virginia, goes into effect on July 1st and will be phased in over five years. During those first five years, only 58 permits a year will be approved. The cap will be lifted in 2028. This kind of ban opens up opportunities for homeowners to be coincidental landlords if they build additional housing on their properties, and rent them out. You'll find links to the Washington Post story in the show notes at newsforinvestors.com. Please remember to join RealWealth by clicking on the "join for free" button. As a member, you'll have greater access to investing opportunities in desirable rental markets across the country. That includes our investor portal, our market data, and our experienced investment counselors. You can also find out more about our spring real estate tours in metros that are popular among single-family rental investors, and our mastermind events to help get you on the path to long-term wealth. If you haven't subscribed to the podcast, please do so! And leave us a review! Thank you! And thanks for listening, Kathy Show Notes link: https://www.newsforinvestors.com Join link: https://join.realwealth.com/?utm_content=Real%20Estate%20News%20Podcast&utm_campaign=Join%20for%20Free&utm_term=Description%20Text%20Link Subscribe link: h

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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