Manage episode 299548533 series 1248803
Kathy Fettke [Speaker]
In this Real Estate News Brief for the week ending July 31st, 2021… an inflation surprise for the Fed Chief, where single-family rents are growing the most, and a pet’s influence on home buying decisions.
Hi, I'm Kathy Fettke and this is Real Estate News for Investors.
We begin with economic news from this past week. Fed Chief Jerome Powell uttered words that many economists had predicted -- inflation has risen higher and faster than he expected. But he still believes that prices will settle back down. As to when it will happen, he says that inflation will probably return closer to the central bank’s 2% mark in the next year… or so. There was “no” change to the Fed’s bond-buying strategy, or short-term interest rates. (1)
The unemployment lines were a little shorter last week. Initial jobless claims were down 24,000 to 400,000. That’s after a surge that brought them to a two-month high. The previous increase was partially due to the shutdown of auto manufacturing plants for retooling during the last few weeks of July. The total number of continuous claims from all state and federal programs is still above 13 million. (2)
Consumer spending was up as Americans took long overdue vacations and services they avoided during the pandemic. The government reported a 1% increase in spending for the month of June. (3) But some of that spending is due to higher prices as inflation ticks up. Prices were up 5.4% year-over-year in June. If you exclude food and energy, they were up 4.5%. (4)
Turning now to real estate, new home sales slid 6.6% in June. That’s the lowest level since the beginning of the pandemic. Buyers have been discouraged by increasingly higher prices, and a diminishing supply of affordable homes. New homes sales had surged to an annual rate of 1 million at the beginning of the year, but they are now down to a rate of 676,000. (5)
Pending home sales for existing homes also fell in June, but not as much. The National Association of Realtors says they were down 1.9% nationally. They were up in the Midwest and the Northeast, but declined in the West and South. (6)
So what about those high home prices? Case-Shiller says the national composite index hit a new record in May for the second month in a row. It was up 16.6% year-over-year. That’s up from 15% in April. The 20-city index shows an even higher increase of 17% in May. The Federal Housing Finance Agency reported similar results. That index shows a record 18% increase for the year. (7)
There are mixed results on consumer confidence. The Consumer Confidence Board says the index edged up a bit in July because consumers are feeling good about the lifting of Covid restrictions, although the Delta variant is threatening our newfound freedom. (8) A survey on consumer sentiment by the University of Michigan shows that consumers are more pessimistic. That index fell from a reading of 85.5 to 81.2, in part due to worries about inflation. (9)
Mortgage rates didn’t move much. Freddie Mac says the average 30-year fixed-rate mortgage was up 2 basis points to 2.8%. The 15-year was down by the same amount to 2.1%. (10)
In other news making headlines...
Single-Family Rent Growth
Single-family rents have been soaring in many parts of the country. Core Logic’s latest update shows the national year-over-year increase for May was 6.6%. That’s up from 1.7% in May of last year.CoreLogic economist Molly Boesel says: “Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals.” (11)
Rents in Phoenix have gone up the most. Those rents are up 14%. Tucson was second highest with a gain of 11.1%. Las Vegas was third, with a 10.7% year-over-year increase.
CoreLogic also broke the data down into price tiers. At the lower levels where rent is 75% or less than the regional median, rents were only up 4.6%. The increases grow larger for the higher-priced SFRs. Rents for homes that were 125% of the regional median or more, were up 7.9%.
Eviction Moratorium Deadline
The eviction moratorium expired on July 31st despite last ditch efforts by some members of Congress to get an extension. The moratorium was initially imposed by the CDC, and the Supreme Court ruled that it could remain in place until the end of July, but after that, it could only be extended by Congress. (12)
Democrats scrambled on Friday to get enough votes for an extension, but that legislation was rejected, and the House adjourned for August recess. President Biden has asked state and local governments to “immediately disburse” rental assistance funds to help renters, and their landlords.
Pets As Home Buyer Priority
There’s new evidence that home-buying decisions are largely based on the needs of pets. A Home.com survey found that 68% of homeowners said they had moved to a new home to accommodate their pets. Of the renters who bought a home, two thirds did so because they wanted to get a pet or keep the one they already had. (13)
One in five people said they rejected a home because it wasn’t pet-friendly enough. Some of the things they are looking for are secure fencing, yard space, hardwood floors, and a mudroom. They also want to be close to parks and places where dogs can play.
Last year, Realtor.com did a survey with similar results.
That’s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!
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Thanks for listening. I'm Kathy Fettke.
11 - https://www.worldpropertyjournal.com/real-estate-news/united-states/irvine/real-estate-news-single-family-rental-report-for-2021-corelogic-may-2021-single-family-rent-index-sfri-molly-boesel-home-rental-data-for-2021-12637.php