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In this Real Estate News Brief for the week ending October 22nd, 2022... what’s ahead with the Fed’s next meeting, the decline of the urban office, and the hybrid workplace challenge. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and forward-looking news about the Fed’s next meeting. Federal Reserve officials are set to hold their meeting on November first and second, and will likely approve a .75 rate hike. They will also be discussing the size of a potential rate hike in December that many economists foresee as a smaller increase. Fed Governor Christopher Waller said in a recent speech: “We will have a very thoughtful discussion about the pace of tightening at our next meeting.” (1) The jobless rate went down by 12,000 applications last week as the effects of Hurricane Ian disappeared. Initial claims dropped to a three-week low of 214,000 which indicates that la

In this Real Estate News Brief for the week ending October 14, 2022... another round of inflation overload, a double whammy for home loans, and the big news from Social Security. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. Federal Reserve officials released the minutes of their last meeting which show they are more worried about inflation than they are about going overboard with rate hikes. They feel that inflation is “unacceptably high” and is not falling as fast as they anticipated. They raised the short-term rate three-quarters of a point at the last meeting to a range of 3 to 3.25%. It was the third super-sized rate hike in a row, and many economists are expecting another three-quarter point rate hike at the next meeting. (1) There were two inflation reports last week that will fan the flames for additional rate hikes. First, it was the producer price index

San Francisco voters will be faced with a ballot measure next month on whether to impose a “vacancy tax” on multi-family units that sit empty for too long. Proposition M is targeting real estate investors who park their money in properties that remain unoccupied. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Proponents of Prop M claim that the city’s housing shortage is at least partially due to investor-owned properties that sit vacant for long periods of time. And that by imposing a progressive tax on the vacant units, investors will be motivated to rent them out or sell them to someone who wants to live in them. Proposition M Exemptions Owners of vacant single-family homes and duplexes would be exempt. Although some proponents feel the rule should be applied across the board, it would only apply to units that have sat empty for 182 days or more in buildings with three or more units. There would be other exemptions for non-

In this Real Estate News Brief for the week ending October 8th, 2022... what the job market says about rate hikes, where renters need to “catch up” on their rent, and why dating has become somewhat of a financial burden for millennials. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and signs that the labor market is cooling off. On Tuesday, the Labor Department reported that the number of job openings fell substantially, from 11.2 million in July to 10.1 million in August. That represents the fourth time job openings have declined in the last five months and the second largest monthly drop ever. (1) The weekly unemployment report on Wednesday also shows that more people lined up for benefits. Initial claims jumped to a five-week high of 219,000, although they remain at historic lows. But the additional 29,000 applications are an indication of a slight rise in lay-

California has another tool in its toolbox to help close the housing gap. It’s legislation that will make it easier to convert dilapidated strip malls, half-empty office buildings, and weed-filled parking lots into multi-family housing. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Governor Gavin Newsom signed Senate Bill 6 and Assembly Bill 2011 on September 28th. The legislation will allow the adaptive reuse of properties that are zoned for retail, offices, and parking in suburban and rural city centers. The new rules are expected to help California reach a goal of 2.5 million new housing units by the end of the decade. One million of those homes need to be affordable, according to the Statewide Housing Plan. It will also help eliminate resistance from local governments, unions, environmentalists, and developers. Supporters are calling it a win-win for housing and for run-down commercial areas that make some cities look lik

In this Real Estate News Brief for the week ending October 1st, 2022... what’s up with the GDP, inflation and jobs, why rent growth is slowing, and a new law for California job seekers. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We have plenty of economic news to report, but first, a few words about Hurricane Ian which has ripped across Florida and South Carolina. Our hearts go out to the families and communities who have been affected. Ian was one of the strongest hurricanes to hit the U.S. and serves as a reminder for homeowners with a high-risk of flooding to check their insurance coverage. (1) Flood insurance is getting more expensive, but it’s better than coming up short after a big hurricane. According to ValuePenguin, the average cost of flood insurance from the National Flood Insurance Program is $985 a year. (2) The government’s latest revision on the GDP shows the economy shrank .6% during the first

We’ve been seeing signs of a housing market pullback, but it’s now official that home price growth is slamming on the brakes. The S&P CoreLogic Case-Shiller home price data is considered the gold standard for home prices, and the July numbers are now showing the first month-over-month decline since 2012. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. National Home Price Index The report, released on September 27th, shows that national home prices were down .2%, for an annual rate of 15.8%. In June, the annual rate was 18.1%. CoreLogic says the difference between those two months is the steepest decline in the history of the index. (1) Managing Director at the S&P Dow Jones Indices, Craig Lazarra, says the slide in pricing “reflects a forceful deceleration.” He says: “As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day. Given

In this Real Estate News Brief for the week ending September 24th, 2022... the Fed’s third big interest rate hike in a row, a record pile of uninvested cash, and the listing data that is changing house hunter choices. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week, and a big interest rate hike by the Fed. The central bank has been getting more aggressive about tackling inflation, and hiked the Federal Funds rate by another three-quarters of a point. Fed officials also plan to continue hiking the funds rate until inflation recedes to the 2% level. They began raising it in March from a near zero level, and have now brought it to a range of 3 to 3.25%. Higher rates will make adjustable-rate loans more expensive. It will also slow the economy down, and reduce hiring, although the job market is still showing a lot of strength. (1) Fed Chief Jerome Powell says it’s not cl

With recent rate hikes and Federal Reserve Chief Jerome Powell saying there are several more to come, investors should expect a recession right around the corner. Some say we are already in one, and that could be true, except that unemployment is still very low, job creation is high, banks have high reserves and corporations are sitting on lots of cash. Retail sales are strong and consumers are still spending. Plus the Fed is planning to continue raising rates, which is not what they do during a recession. They lower rates in a recession. This tells me the economy has been racing at full speed, while the Fed is stomping on the breaks. That sounds like a volatile ride, and Powell admitted it could be a hard landing. Investors need to be wearing their seat belts, and maybe a helmet and pads. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. If you haven't recession-proofed your life yet, you better get on it. This means cutting bac

The Federal Reserve followed through with its plan for another rate hike this week. Fed officials hiked short term rates by three-quarters of a percent. Fed Chief Jerome Powell also reiterated his determination to bring inflation levels back down to 2% with more rate hikes and warned that the housing market is headed for a “correction.” Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Powell said after the September policy meeting: “Our expectation has been we would begin to see inflation come down, largely because of supply side healing. We haven’t. We have seen some supply side healing but inflation has not really come down.” (1) Fed Hikes Short-Term Rates The Federal Open Market Committee raised the Federal Funds rate to a range of 3 to 3.25%. It’s the third consecutive .75% rate hike and brings the overnight lending rate to the highest it’s been since early 2008. The central bank started raising rates in March from a level t

In this Real Estate News Brief for the week ending September 17th, 2022... what the job market says about recession, why home prices might be peaking, and how much lot prices have contributed to high home prices. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. Moody’s chief economist, Mark Zandy, says “we’re not even close” to a recession right now. He spoke at the National Multifamily Housing Council’s fall meeting last week. He says it’s difficult to even think we’re in a recession with such great data on the job market. We’ve got high job creation numbers, a high number of unfilled positions, a high “quits rate” which means that employees feel confident about quitting one job to find another, and a low number of layoffs. (1) He also says it’s likely that GDP numbers will be revised higher, and the average homeowner has about $185,000 in equity with money in the b

Rent growth is cooling off a bit for both apartments and single-family rentals. New data from Yardi Matrix shows that national rent growth declined slightly in August. That could be a sign of the housing market slowdown, but for landlords who are worried about their ROI - the year-over-year rent growth is still close to 10% for both asset classes. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Yardi data shows that average asking rent for single-family homes was down $2 a month in August, to $2,090. The year-over-year growth percentage was 9.5% or about 170 basis points less than July. In July, rents were up an average of $7 a month for an annual growth rate of 11.2%. So you can see, single-family rent growth has pulled back a little, but it’s still showing strong growth. (2)(3) For apartments, the average asking rent was down $1 a month in August, to $1,718 with a year-over-year growth rate of 10.9%. That’s also 170 basis

In this Real Estate News Brief, we'll look at economic news from the week ending September 10th, 2022... Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News Last Monday was Labor Day, and there were few reports issued during the rest of the week. But Fed Chief Jerome Powell rocked the stock market when he spoke at the Cato Institute. It was a conference on monetary policy, where Powell vowed to fight inflation with more rate hikes, and led economists to believe we’ll see another .75-1 basis point hike at the central bank’s meeting later this month. It would be the third such rate hike in a row, and would bring the Federal Funds rate into a range of 3.25 to 3.50%. (1) Powell said during the speech: “History cautions strongly against prematurely loosening policy. I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done.” Fed officials want to get infla

It looks like the pandemic housing boom is coming to an end. More and more sellers are slashing prices as mortgage rates rise and homes become less affordable for potential buyers. Some analysts are predicting that home values will drop by as much as 20% in markets that have gone up the most. And there are five markets at the top of that list. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Real estate experts are calling these overvalued markets “zoom towns” because they experienced rapid price growth during the pandemic. According to Rick Palacios at John Burns Real Estate consulting, home prices in Boise, Idaho, will be the first to get slammed. Palacios says: “It is the single market that we anticipate actually getting to price declines in 2022.” (1) The Rise of Zoom Towns He says Boise attracted a lot of new residents during the pandemic because of its lower cost of living and quality of life, but that drove prices sky hig

Proptech startup Pacaso is taking its public relations strategy to the next level. The San Francisco-based company helps people buy the second home of their dreams with a co-ownership model that has sparked a lot of controversy in some places. While the general perception of Pacaso is a belief that it contributes to the housing crisis, Pacaso is showcasing its model as part of the “solution.” Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Pacaso has caused a dust-up in several places as full-time residents fight back against short-term rentals. Many critics see Pacaso through this lens, but it’s not a short-term rental operation. Instead of renting the home out to a stream of different occupants over the days, weeks, months, and years, Pacaso homes are purchased by up to eight buyers and each buyer gets to use the home for a percentage of the year that corresponds to the buyer’s percentage of the purchase price. Pacaso manages

In this Real Estate News Brief for the week ending September 3rd, 2022... why rate hikes might backfire, why economists are seeing a sharp increase in the housing supply, and what Elon Musk is saying about owning a tiny home in Texas. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. A paper released at the Jackson Hole Summit argues that the central bank cannot control inflation by rate hikes alone. Researchers from Johns Hopkins University and the Chicago Fed authored the report, and say rate hikes could make matters worse without a reduction in government spending. The federal debt is currently at 123% of GDP which is down slightly from early 2020 during the beginning of the pandemic, but it’s much higher than it has been since the mid-1940’s. As interest rates rise, so does the cost of that debt. (1) The latest reports on the job market, and manufacturing, both sh

Orlando landlords are suing Orange County, Florida, to challenge a rent cap proposal that’s headed for the November ballot. Attorneys for two major real estate groups filed the lawsuit in mid-August and are seeking an injunction to keep it from going before voters. They say the proposal violates state law which bans rent control under most circumstances. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. If the measure is approved, it would not apply to single-family rentals or vacation homes. It would only apply to multi-family units, and cap any rent increases to the rate of inflation as determined by the Consumer Price Index. The ordinance would last one year, and would need to be renewed by another vote to continue. But there’s a very high bar that the county must reach to get this approved. According to state law, a city or jurisdiction must prove there’s a housing emergency and that rent control would solve the problem before

Tenant advocates are asking the White House for help in curbing what they call “rent inflation.” A coalition of tenant unions, community organizations, and legal groups is asking the Biden administration to declare a state of emergency and investigate ways to regulate rents. As reported by the Washington Post, these groups want the government to address rent growth with the same urgency as it has with high gas prices. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The coalition sent a proposal that would involve six government agencies for an “all-out government intervention” on rent inflation. The Consumer Price Index shows that overall annual inflation hit 9.1% in June, which is a 40-year high. That includes food and energy, which helped drive that number to a record high, along with housing costs. According to data firm Yardi Matrix, the year-over-year rate of inflation for multi-family rents was 12.6% in July. For sing

In this Real Estate News Brief for the week ending August 27th, 2022... the Fed Chief’s Jackson Hole message on rate hikes, the July dip in inflation, and why some home buyers say they have regrets. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Economic News We begin with economic news from this past week. Federal Reserve Chief Jerome Powell shook things up with some hawkish remarks in a speech at Jackson Hole. His comments triggered a major stock market sell-off with the Dow dropping more than 1,000 points. Powell’s speech focused on the central bank’s responsibility and resolve to get inflation back down to the 2% level. He said that could include another three-quarter point rate hike at the Fed’s September meeting, but Powell said the size of the rate hike will depend on all the totality of the data between now and then. (1) He

Buildable lots have been in short supply this year, but data from one real estate company expects that to improve next year. Zonda’s New Home Lot Supply Index shows the year-over-year supply has decreased across the U.S. As of Q2, it was down 9.3%, but it doesn’t take into account lots under development, which are up substantially compared to last year. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Zonda’s chief economist, Ali Wolf, says: “While vacant developed lot inventory tightened slightly in the second quarter, the key number to track going forward is lots under development, which are up 28% compared to last year.” (1) 10% Year-Over-Year Decline The New Home Lot Supply Index came in at 38 for the second quarter, which represents a 2.2% decline from the first quarter and a 9.3% decline from the second quarter of last year. Zonda says that “nationally, the 2022 data reflects a significantly undersupplied market” and that