Real Estate News: Real Estate Investing Podcast

Copyright: © Copyright 2021 RealWealth Network, LLC. All rights reserved. Disclaimer: For entertainment purposes only and not offering investment advice. You are fully responsible for the use of this content and hold the producers and company harmle

Latest Episodes:

CPI vs PCE to Create Inflation Confusion Mar 10, 2023

Show notes

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

The Real Estate News Brief: Testimony from the Fed Chief, Home Price Forecast, Rent Growth Rebound Mar 10, 2023

Show notes

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 to the site. That includes our market data, property teams, investment counselors, and a list of property tours that RealWealth is offering over the next few months. Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.bloomberg.com/news/articles/2023-03-08/powell-says-no-decision-made-on-speeding-up-pace-of-rate-hikes#xj4y7vzkg 2 - https://www.marketwatch.com/story/jobless-claims-fall-again-and-stay-below-200-000-for-seventh-week-in-a-row-523a6d27?mod=home-page 3 - https://www.marketwatch.com/story/pending-home-sales-rise-8-1-in-january-largest-increase-since-june-2020-1896d2d7?mod=search_headline 4 - https://www.marketwatch.com/story/u-s-construction-spending-falls-slightly-in-january-87b95bce?mod=mw_latestnews 5 - https://www.freddiemac.com/pmms 6 - https://www.cnbc.com/2023/03/02/mortgage-rates-back-over-7percent.html 7 - https://www.redfin.com/news/housing-market-update-home-sale-prices-fall-first-time/ 8 - https://www.redfin.com/news/share-of-homes-affordable-2022/ 9 - https://rentalhousingjournal.com/national-rent-growth-turns-positive-in-february/?utm_source=Master+Vendors&utm_campaign=88767b9e22-EMAIL_CAMPAIGN_2023_03_01_02_51&utm_medium=email&utm_term=0_-88767b9e22-%5BLIST_EMAIL_ID%5D 10 - https://www.corelogic.com/intelligence/corelogic-us-annual-rent-price-growth-dropped-by-nearly-half-in-december/

U.S. Home Values Drop $2.3 Trillion But Some Markets Still Rising Mar 03, 2023

Show notes

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/

The Real Estate News Brief: Inflation Flip-Flop, Investor Purchase Activity, Big Landlords Gobbling Up SFRs Mar 01, 2023

Show notes

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 interest, insurance, and depreciation. (11) That's it for today. Check the show notes for links, and join RealWealth if you'd like to know where it still makes sense to invest in single-family rentals. We're offering several market tours over the next few months. You can join RealWealth and check out the tours at newsforinvestors.com. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.marketwatch.com/story/inflation-jumps-in-early-2023-pce-shows-and-stays-stubbornly-high-e406552a?mod=economy-politics 2 - https://www.marketwatch.com/story/fed-minutes-show-some-officials-thought-easier-financial-conditions-could-mean-tighter-monetary-policy-bf431e25?mod=federal-reserve 3 - https://www.cnbc.com/2023/02/22/fed-minutes-february-2023-minutes-show-fed-members-resolved-to-keep-fighting-inflation.html 4 - https://www.cnbc.com/2023/02/24/feds-mester-says-she-has-hope-that-inflation-can-be-brought-down-without-a-recession.html 5 - https://www.marketwatch.com/story/u-s-jobless-claims-stay-firmly-below-200-000-for-6th-straight-week-2ccc7a46?mod=mw_latestnews&mod=home-page 6 - https://www.marketwatch.com/story/u-s-new-home-sales-rise-by-7-2-despite-weakness-in-the-broader-sector-13f6dde4?mod=economic-report 7 - https://www.marketwatch.com/story/existing-home-sales-fall-for-the-12th-straight-month-in-january-lowest-since-2010-17a703ba?mod=economic-report 8 - https://www.freddiemac.com/pmms 9 - https://www.redfin.com/news/investor-home-purchases-q4-2022/ 10 - https://www.cnbc.com/2023/02/21/how-wall-street-bought-single-family-homes-and-put-them-up-for-rent.html?__source=realestate%7cnews%7c&par=realestate 11 - https://www.congress.gov/bill/117th-congress/house-bill/9246?s=1&r=2

The Real Estate News Brief: Double Dose of Inflation Data, Preventing a Housing Market Crash, Remote Worker Worries Feb 22, 2023

Show notes

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 newsforinvestors.com, and subscribe to our podcast. Our podcast team would also greatly appreciate a review. Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.marketwatch.com/story/cpi-shows-u-s-inflation-still-sticky-e08c9671?mod=economic-report 2 - https://www.marketwatch.com/story/wholesale-inflation-surges-in-early-2023-ppi-shows-2efefb24?mod=economy-politics 3 - https://www.marketwatch.com/story/jobless-claims-stay-below-200-000-for-fifth-straight-week-labor-market-still-hot-b7f7aa9e?mod=economy-politic 4 - https://www.marketwatch.com/story/u-s-housing-starts-fall-by-4-5-in-january-to-the-lowest-level-since-june-2020-3aebe306?mod=search_headline 5 - https://www.freddiemac.com/pmms 6 - https://www.businessinsider.com/real-estate-investors-will-save-us-housing-market-from-crash-2023-2 7 - https://eyeonhousing.org/2023/02/single-family-built-for-rent-growth-strong-in-2022/ 8 - https://fortune.com/2023/02/16/remote-workers-wfh-expensive-utility-costs-sky-connect/

Fastest Growing States for Real Estate Investors Feb 17, 2023

Show notes

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

Is It Fair to Require Wealth for Accredited Investing? Feb 16, 2023

Show notes

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 join button at the RealWealth home page for access to all our news and data on the U.S. real estate market. And don't forget to subscribe to the podcast and follow me on instagram @kathyfettke for real estate market updates and commentary. Thanks for listening! Links: 1 - https://thediwire.com/house-hearing-debates-changes-to-the-secs-definition-of-accredited-investor/ 2 - https://www.investopedia.com/terms/s/sophisticatedinvestor.asp 3 - https://thediwire.com/sec-expands-definition-of-accredited-investor/ 4 - https://thediwire.com/sec-signals-changes-to-accredited-investor-definition/ 5 - https://www.thinkadvisor.com/2023/02/08/lawmakers-grapple-with-accredited-investor-definition/

The Real Estate News Brief: Single-Family Rental Forecast, Build-to-Rent Demand in 2023, A New Expense for LA Landlords Feb 15, 2023

Show notes

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 new ordinance would apply to tenants in newer homes who are not already covered by existing rent control laws. There are 84,000 of those homes in L.A., all built after 2008. That's it for today. Check the show notes for links at newsforinvestors.com. Please remember to hit the join button to become a RealWealth member. It's free to join, and free to access the data on our site. We just held an all-day virtual live event with property teams from markets across the country. We'll be uploading videos to our website from that event for people who missed it. And don't forget to subscribe to our podcast, and follow me on Instagram for market updates @kathyfettke. Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.marketwatch.com/story/powell-says-strong-jobs-report-shows-fed-needs-to-keep-raising-rates-but-he-expects-significant-declines-in-inflation-rate-in-2023-11675794928?mod=federal-reserve 2 - https://www.marketwatch.com/story/u-s-adds-517-000-new-jobs-in-january-in-sign-labor-market-still-strong-11675431419?mod=home-page 3 - https://www.reuters.com/markets/us/feds-cook-january-job-gains-increase-hopes-soft-landing-2023-02-08/ 4 - https://www.marketwatch.com/story/jobless-claims-climb-13-000-to-196-000-still-near-pandemic-era-low-11675949780 5 - https://www.freddiemac.com/pmms 6 - https://www.globest.com/2023/02/06/sfr-is-well-positioned-even-as-headwinds-persist/ 7 - https://www.globest.com/2023/02/08/2023-will-be-another-strong-year-for-btr-despite-slowing-rent-growth/ 8 - https://www.dailybreeze.com/2023/02/07/new-law-in-la-landlords-must-pay-relocation-costs-if-they-raise-rents-too-high/

House Bill Would Block China from Buying U.S. Farmland Feb 13, 2023

Show notes

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 the show notes at newsforinvestors.com. Please hit the join link for up-to-date news and data on the U.S. real estate market. It's free to join, and takes less than a minute. And don't forget to subscribe to the podcast and follow me on instagram @kathyfettke for real estate market updates and commentary. Thanks for listening! I'm Kathy Fettke. Links: 1 - https://fortune.com/2023/02/08/forget-chinese-balloonselling-farmland-to-foreigners-concerns-us-lawmakers/ 2 - https://www.cbsnews.com/news/chinese-spy-balloon-shot-down-over-atlantic-taller-than-statue-of-liberty/ 3 - https://mcmorris.house.gov/posts/mcmorris-rodgers-newhouse-introduce-bill-to-block-china-from-purchasing-american-farmland 4 - https://www.nytimes.com/2023/02/07/us/texas-china-ownership-real-estate-ban.html 5 - https://www.dailymail.co.uk/news/article-9885259/Secretive-Chinese-billionaire-buys-140-000-acres-Texas-wind-farm-blocked-governor.html 6 - https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/EPAS/PDF/2020_afida_annual_report.pdf 7 - https://newhouse.house.gov/sites/evo-subsites/newhouse.house.gov/files/evo-media-document/2.2.2023-china-act.pdf

Real Estate News Brief: Fed's February Rate Hike, Elon Musk as Homebuilder, Realtors Love ChatGPT Feb 10, 2023

Show notes

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 chatbot was introduced to the public just a few months ago. It is currently free to use, but some people are saying they'd gladly pay 100 to $200 a month for access. That's it for today. Check the show notes for links at newsforinvestors.com, and join RealWealth for more information about real estate investing. It's free to join and get access to all our data including our virtual live event on February 11th. It's called "Why You Should Invest in Real Estate in 2023" and features 11 property teams and 1 commercial broker. Once you sign up as a member, it takes about two seconds to register for the event at our website. And don't forget to subscribe to the podcast if you haven't already, and leave us a review! Thanks for listening. I'm Kathy Fettke. Links: 1 - https://www.cnbc.com/2023/02/01/fed-rate-decision-february-2023-quarter-point-hike.html 2 - https://www.cnbc.com/2023/01/31/why-the-case-is-growing-for-a-fed-rate-cut-before-year-end.html 3 - https://www.marketwatch.com/story/u-s-jobless-claims-drop-to-nine-month-low-of-183-000-11675345085?mod=economy-politics 4 - https://www.marketwatch.com/story/u-s-adds-517-000-new-jobs-in-january-in-sign-labor-market-still-strong-11675431419?mod=home-page 5 - https://www.marketwatch.com/story/u-s-home-prices-fall-for-5th-straight-month-in-november-case-shiller-index-shows-11675174667?mod=economy-politics 6 - https://www.marketwatch.com/story/u-s-construction-spending-falls-in-december-11675264823?mod=economic-report 7 - https://www.freddiemac.com/pmms 8 - https://www.cnbc.com/2023/02/02/mortgage-rates-five-percent-range-first-time-september.html 9 - https://therealdeal.com/texas/2023/01/30/elon-musk-lennar-plan-workforce-housing-near-boring-co/ 10 - https://www.businessinsider.com/realtors-using-ai-chatgpt-to-write-property-listings-emails-2023-1

Our TOPPODCAST Picks

Follow Us

Stay Connected

Real Estate News: Real Estate Investing Podcast

Related Podcasts

Links

Stay Connected