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CubiCasa Announces Free Floor Plan Creation Tool Aug 17, 2022

Show notes

A Finnish company is hoping to give U.S. home buyers something they've been craving! Real estate software company CubiCasa just launched a product in the U.S. that produces a FREE floor plan that sellers can put into for-sale listings. According to the National Association of Realtors, it's something that just 10 to 15% of U.S. listings include right now, but it's third on a list of desirable listing features!

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Clear Capital purchased CubiCasa last September, so it's now a subsidiary of Clear Capital, but it operates independently. CubiCasa says on its website that it's the market leader for this kind of software in its home country, and is already being used in more than 170 countries around the world. With its introduction into the U.S., it says it's one of the major players here and will help revolutionize the home-buying experience. (1)

Market Properties More Effectively with Floor Plans

The president of CubiCasa, Jeff Allen, says: "By offering a free version of our mobile scanning technology in the U.S., we're helping potential buyers make more informed decisions, while empowering agents and sellers to market their properties more effectively." He also says: "It's time the U.S. caught up" with the rest of the world. (2)

CubiCasa says it has already provided more than one million floor plans to homeowners and sellers internationally. It operates with the use of an app on your smartphone. After putting in your location, you point the camera towards the lower part of the walls where they intersect with the floor, and record the layout as you walk around the home.

There are specific instructions for doing it properly, such as how you hold the camera, what part of the interior you should be recording, and how you should walk in and out of spaces. After you are done collecting all the visual information, the sketching technology takes about 24 hours to produce a finished floor plan.

You can also pay a small amount to have additional features incorporated into the floor plan, such as kitchen cabinets, bathroom features, furniture and appliances. If you want your floor plan produced more quickly, it costs an extra $10 to get it within six hours.

Do Floor Plans Violate an Architect's Copyright?

CubiCasa says the app will accurately calculate the square footage of a home, and that this will improve the quality of property data and inspection reports. Although floor plans are quite common in real estate markets around the world, they've been more of a niche market here. And there has been some question about potential copyright violations.

In Missouri, the architects at Designworks Homes sued Columbia House of Brokers Realty over the use of floor plans in listings. The case evolved from the listing of a home in 2010 and a floor plan produced by the sellers. When the architects discovered the use of the floor plan, they sued for copyright infringement.

Last year, they won their case in a lower court, but the Realty appealed to the Supreme Court. NAR also filed an amicus brief in support of the Realty, arguing that the ruling misrepresents federal law, puts decades of a legal precedent at risk, eliminates a long-standing practice in the real estate market, and makes many homeowners vulnerable to lawsuits if they have used floor plans to sell their homes in the past. (3)

Supreme Court Rejects Floor Plan Case

The Supreme Court declined to review the case however, saying the two sides have not presented compelling reasons to do so. But more recently, the Seventh Circuit ruled against the same architectural company in another lawsuit. It affirmed a lower court's ruling against the plaintiff saying that a floor plan must be "virtually identical" to the architect's drawing to be considered a violation of the copyright.

NAR says that "many homebuyers rely on floor plans in real estate to decide whether to purchase a residence, and their ability to secure financing for that transaction is often contingent on an appraisal that requires the reaction of a floor plan." (4) Homeowners also make floor plans to help them decide on where they want furniture or how they want to renovate a home. Plus, many jurisdictions also want to see a floor plan before they approve a renovation project.

The legal dust-up has apparently settled enough so that CubiCasa feels confident about launching in the U.S. If you want to check it out, you'll find links in the show notes at newsforinvestors.com.

And please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.cubi.casa/about/

2 -https://www.housingwire.com/articles/this-app-lets-homeowners-generate-floor-plans-of-their-homes-for-free/

3 -https://www.nar.realtor/newsroom/nar-asks-supreme-court-to-protect-consumers-from-lawsuits-when-making-floor-plans-of-their-homes

4 -https://www.nar.realtor/newsroom/nar-asks-supreme-court-to-protect-consumers-from-lawsuits-when-making-floor-plans-of-their-homes

Highlights: 2022 Housing Report from JCHS Aug 12, 2022

Show notes

Housing costs have surged over the last year or so, but a new report shows that demand is still strong due to several factors, and that pricing pressures may ease up in the months ahead. The Joint Center for Housing Studies at Harvard University just released its annual State of the Nation's Housing report, and I'd like to share some of the highlights.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Home Price Appreciation

Nationwide home price appreciation hit 20.6% in March of this year. That's up from 20% in August of last year. The data shows record-high appreciation in 67 of the top 100 markets, and the rest were also up by at least 9%. Harvard researchers say higher home prices are keeping about 4 million renters from buying their own homes, and that increases demand for rental housing. (1)

Those who can qualify for a home often can't find one in their price range. They are also competing with investors who have increased their share of moderately-priced homes.

Single-Family Investor Sales

Researchers say investors have moved aggressively into the single-family rental market and account for 28% of the SFR homes sold in the first quarter of this year. That's up from 19% in the first quarter of last year. From 2017 to 2019, the average was about 17%.

Investors have been focusing on markets with rapid price appreciation. In Atlanta, the investor share of home sales was 41% in the fourth quarter of last year. In San Jose, California, it was 38%. In Phoenix, 36%, and in Los Angeles, 34%.

Demand & Rent Growth

As demand rose for rentals, so did rents. The report shows they were up 12% nationally in the first quarter. Rent growth was more than 20% in several metros. The hottest markets were in the South and West, but some coastal areas saw big gains because rents had fallen so much during the pandemic.

Single-family rents have gone up faster than apartments mostly due to demand. That's the result of remote workers who want more space at home. CoreLogic shows that year-over-year rents were up 15% nationally as of March. The biggest gains were in Miami at 39% and Cape Coral at 28%, but Phoenix and San Diego were also mentioned with rent growth of 18 and 17% respectively.

Strong Household Formation

Strong household formation is contributing to increased demand and higher housing costs. From Q1 of 2020 to Q1 of 2022, new households were forming at an annual rate of 1.6 million. Harvard researchers had predicted an increase of 1.2 million annually from 2018 through 2028, so the current rate of increase is well above the expected amount.

Much of the growth is due to millennials making up for previous delays in household formation.

Government stimulus during the pandemic and the economic rebound last year also gave many young adults the means to pay for housing. But researchers are also predicting a new slowdown in household formation as the money situation tightens to control inflation. New household formation has raised the homeownership rate .1% to 65.4%.

Residential Construction

The pace of residential construction is finally picking up. It has been trailing behind household growth for many years, but in 2021, single-family starts hit 1.1 million. That's the first time it's been above 1 million in 13 years. Multifamily starts are also up. They hit 470,000 which is a 30-year high.

The big issue for builders has been all the supply chain disruptions. In April of this year, 1.64 million homes were under construction with delayed completion dates due to the supply chain hold-ups. The labor shortage and local land use regulations have also made it difficult for builders.

Affordability Crisis & Outlook

The affordability crisis has continued to get worse for both homeowners and renters. In 2020, 30% of households were cost-burdened, meaning they were paying more than 30% of their income on housing. 14% were severely burdened. The figures are worse for renters. 46% were hard-pressed to pay their rent, and 24% were severely burdened. And now, inflation is making things worse.

Although low-income families will continue to struggle with housing costs in the near term, the report says the outlook for overall housing demand is mostly positive. A lot depends on whether the Federal Reserve can control inflation, but Harvard researchers say that demographic shifts are favorable, unemployment is low, and wage growth is strong – which all contribute to a positive outlook.

You'll find a link to the full report in the show notes for this episode at newsforinvestors.com.

Please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1. https://www.jchs.harvard.edu/blog/across-nation-rising-prices-and-increased-interest-rates-limit-access-homeownership

Quick News Update: Inflation Report Surprise Aug 10, 2022

Show notes

We have a quick news update on today's inflation report. Investors have been waiting anxiously to see if inflation hit a peak in June and is now headed down, prompting the Fed to slow down on rate hikes. Well, we have good news. The report on the Consumer Price Index, or CPI, shows a bigger-than-expected decline in July. It shows that the annual rate of inflation dropped from 9.1% to 8.5%. Economists surveyed by Dow Jones had expected a reading of 8.7%.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

The decrease was mostly due to a big drop in gas prices. The report says the gasoline index was down 7.7% which offset a rise in food and housing costs. When you look at the broader category of energy, that was down 4.6% because of a drop in gasoline and natural gas prices, but the index for electricity was higher. (1)

The core rate of inflation, which excludes food and fuel, remained the same as it was in June at 5.9%, but that was a better reading than economists had expected. Shelter accounts for about 40% of the core rate and that was up 5.7% on an annual basis.

Economists and stock traders had been predicting another .75% rate hike in September to help control inflation. But as CNBC reports, they now believe there's a better chance for just a half point rate hike. (2) Louis Navellier said in his podcast that he believes it could be a 75 basis rate hike still, but that it will most likely be the last one because it's rare to see rate hikes before an election. If that's the case, he's expecting a big stock market rally after September 21st.

The Chief Economist at Jeffries, Aneta Markowska, told CNBC: "Things are moving in the right direction. This is the most encouraging report we've had in quite some time." She also agrees that it will take some pressure off Federal Reserve officials at their next meeting.

You'll find a link to the full report in the show notes at newsforinvestors.com.

Please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.bls.gov/news.release/cpi.nr0.htm

2 -https://www.cnbc.com/2022/08/10/consumer-prices-rose-8point5percent-in-july-less-than-expected-as-inflation-pressures-ease-a-bit.html

The Real Estate News Brief: Fed's Next Move, Mortgage Rate Rollback, Single-Family Rent Growth Aug 10, 2022

Show notes

In this Real Estate News Brief for the week ending August 6th, 2022... the Fed's next move, a mortgage rate rollback for home buyers, and a new all-time high for single-family rents.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Economic News

We begin with economic news from this past week. Federal Reserve policymakers say they are "nowhere near" the end of their fight against inflation. Four Fed Presidents spoke out on Tuesday, August 2nd, about their resolve to get inflation back down to 2%. San Francisco Fed Chief Mary Daly said that she is currently seeing a 50 basis point rate hike as appropriate in September, but she says: "If we just see inflation roaring ahead undauntedly, the labor market showing no signs of slowing, then we'll be in a different position where a 75-basis-point increase might be more appropriate." Comments from the other three Fed Presidents were similar. (1)

And then there was a screamingly strong jobs report a few days later. The Bureau of Labor Statistics reported on Friday that hiring in July exceeded expectations. Nonfarm payrolls were up 528,000, and the unemployment rate dipped lower, to 3.5%. To put this in perspective, in the years leading up to 2020 when the economy was robust, job creation was closer to 195,000 per month on average.

The unemployment rate is now back to its pre-pandemic level. As reported by MarketWatch, it's tied for the lowest level since 1969. (2) Some economists see the strong jobs report as signs that the Federal Reserve will lean toward a more aggressive rate hike in September. KPMG Chief Economist Diane Swonk said in a CNBC report: "This is hot. For the Fed, this is another 75 basis point hike." (3)

The unemployment report shows a slightly elevated level of new claims. During the last week of July, 260,000 people applied for benefits which is an increase of 6,000 from the week before. The number of continuing claims was also higher by about 48,000. That brings the total number of continuing claims up to about 1.42 million, which is the highest level since April. (4)

A new report on home price growth shows that year-over-year prices were up 18.2% in June. On a month-to-month basis, the CoreLogic report says they were up .6% for the 125th consecutive month of higher prices. This is more inflationary news that may convince the Fed to be more aggressive with rate future hikes. However, the report does shows that price growth is slowing down. CoreLogic expects it to drop to 4.3% by next June. (5)

Higher home prices also increase homeowner equity. CoreLogic says the average borrower had $280,000 in home equity at the end of the first quarter. That's a gain of about $64,000 over the past year, and a gain of about $125,000 over five years. (6) Those folks expecting a housing crash will have to consider why homeowners with so much equity and low fixed rate mortgage payments would suddenly abandon their homes.

Higher home prices are slowing sales, and that's driving up inventory levels, but they are still nowhere they need to be. According to Realtor.com, active listings are about 30% higher than they were a year ago but are less than half of what they were in June of 2019 and about two-thirds of where they were in June of 2020. The good news is that homebuyers have a few more homes to choose from and a little extra time to make a decision, but only a little extra time. The Realtor.com trends report says that homes are spending just ONE extra day on the market compared to last year.(7)

New home builders are also experiencing a sales slowdown and higher inventory levels. According to the Federal Reserve Bank of St. Louis, there are more than nine months supply of newly-built homes on the market. However, it can be difficult to gauge new home inventory because many of those homes are experiencing construction delays and not sales delays. (8)

Another sign of the housing market slowdown is a sharp drop in construction spending. The Commerce Department reported a 1.1% decrease in June. Private residential construction took the biggest hit. It was down 1.6%. (9) Ironically, the construction of new homes is what's needed to increase supply, yet builders are generally the first to get hit with higher interest rates. A slow down in new home construction could mean continued bidding wars on existing homes in growth markets.

Mortgage Rates

Home buyers are getting a break right now on their mortgage rates. Freddie Mac says the average 30-year fixed-rate mortgage dipped below 4% for the week ending August 4th. They dropped 31 basis points to an average of 4.99%. The 15-year dropped 32 points to 4.26%. Freddie Mac's Chief Economist, Sam Khater, says: "Mortgage rates remain volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth." (10)

You may be wondering why mortgage rates have gone down when the Fed fund rate is going up. Mortgage rates are generally tied to the 10-year Treasury as mortgage backed securities attract the same type of investor. With the Fed raising rates aggressively, big investors are worried it will create a recession, so they seek the safety of bonds and MBS's. These investors also may believe that we've hit a peak in inflation. Otherwise they would invest in inflationary stocks instead of bonds.

In other news making headlines...

Single-Family Rent Growth

Demand continues to grow for single-family rentals as more and more potential homebuyers are priced out of the market. And that's pushing rents higher. A new report from Yardi Matrix says the average single-family asking rent rose $23 in June, to an all-time high of $2,071. (11)

Rent growth is slowing for both single-family and multi-family rentals. The report says that year-over-year single-family rent growth has dropped 90 basis points, to an annual rate of 11.8%.

House Approves Remote Notarization

The U.S. House approved legislation that would make remote online notarizations possible in all 50 states. The bill will make it easier to close a deal without having the notary and the person signing the agreement in the same room. During the pandemic, agents in many states had to arrange for drive-by closings, with social distancing. (12)

The pandemic also inspired almost half the states to allow for remote notarizations. The National Association of Realtors pushed for a national bill to support the demand for virtual sales and closings in all 50 states, even though there's less concern now about pandemic-related safety measures. The bill is now pending consideration in the Senate.

That's it for today. Check the show notes for links at newsforinvestors.com.

I would also like to share some other exciting news. Within the last few weeks, we hit a big milestone for Real Estate News for Investors. It's been six-and-a-half years since our first news podcast, and we have now posted our 1200th show! We are currently posting two or three podcasts a week for real estate professionals. Set your podcast player to have them automatically downloaded, so you don't miss any!

And please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.bloomberg.com/news/articles/2022-08-02/daly-says-fed-nowhere-near-done-on-curbing-high-infation-rate

2 -https://www.reuters.com/markets/us/feds-daly-34-reasonable-place-get-by-year-end-rates-2022-08-03/

3 -https://www.cnbc.com/2022/08/05/jobs-report-july-2022-528000.html

4 -https://www.marketwatch.com/story/u-s-unemployment-claims-climb-to-260-000-and-stick-near-nine-month-high-11659616784?mod=economy-politics

5 -https://www.corelogic.com/intelligence/u-s-home-price-insights/

6 -https://www.corelogic.com/intelligence/podcast-vodcast/oce-monthly/homeowner-equity-reached-record-level-in-early-2022/

7 -https://www.realtor.com/research/weekly-housing-trends-view-data-week-july-30-2022/

8 -https://fred.stlouisfed.org/series/MSACSR

9 -https://www.marketwatch.com/story/construction-spending-fell-sharply-in-june-11659363237?mod=economic-report

10 -https://www.freddiemac.com/pmms

11 -https://rentalhousingjournal.com/average-rents-rise-to-all-time-high-in-june/?utm_source=Master+Vendors&utm_campaign=a590da3d77-EMAIL_CAMPAIGN_2022_07_20_02_10&utm_medium=email&utm_term=0_4780df7d33-a590da3d77-113928773

12 -https://magazine.realtor/daily-news/2022/07/28/remote-online-notarization-is-one-step-closer

The Real Estate News Brief: Negative GDP in Q2, Inflation Jumps Again, the Fed's Big Rate Hike Aug 06, 2022

Show notes

In this Real Estate News Brief for the week ending July 30th, 2022... a negative GDP report, inflation heads higher, and the Fed's latest rate hike.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Economic News

We begin with economic news from this past week. The Federal Reserve carried out its fourth rate hike this year to slow inflation, and the second increase of .75%. That puts the top end of the overnight lending rate at 2.5%. Higher rates make it more expensive for businesses and consumers to borrow money and that helps slow the economy, and the rate of inflation. (1)

The latest reading on inflation was a report on the PCE or Personal Consumer Expenditure Index. That shows a 1% increase in June to a yearly rate of 6.8%, which is the highest since January of 1982. When you eliminate fuel and food, the core PCE is 4.8%. The Federal Reserve considers the PCE to be more accurate than the CPI because it takes into account other variables, such as consumers shopping for different, lower-priced items. (2)

Fed Chief Jerome Powell has said repeatedly that inflation is too high, but he said during a press conference after the latest rate hike, that the U.S. is not in a recession despite a second quarter of negative economic growth. The government says the economy shrank at an annual pace of -.9% in Q2. That's after a -1.6% loss of economic activity in Q1. Two consecutive quarters of negative growth is the standard definition of a recession, but thanks to a number of things bolstering the economy, such as a strong job market, many economists, including Fed Chief Powell, don't believe we're there yet. (3)

Powell said several times that the central bank will do whatever it takes to control inflation, which may put the U.S. into a recession at some point. He suggested more rate hikes in the coming months but didn't give any forward guidance because the situation is so volatile. The Fed expects short-term interest rates to hit 3.5% by the end of the year. Some economists are predicting a 50 point hike in the next meeting followed by two 25 point hikes. (4)

Initial jobless claims had been slowly rising, but were about 5,000 applications lower last week. The Labor Department says they fell to a total of 256,000. Ongoing claims were also lower. They were down 25,000 to 1.36 million. (5)

On to the housing market…

New home sales fell to their lowest level since the pandemic began. They were down 8.1% in June to a seasonally-adjusted rate of 590,000. The year-over-year drop is 17.4%. Many consumers can't afford a high-priced home combined with a higher mortgage rate. The median sales price of a new home was $402,400 in May. (6)

Pending home sales for existing homes also tumbled in June. According to the National Association of Realtors, they were down 8.6% for the month and 20% year-over-year. As MarketWatch reports, potential home buyers are spooked by high home prices and inflation in general, higher mortgage rates, and talk of a recession. NAR's Chief Economist Lawrence Yun says that buying a home in June of this year was 80% more expensive than it was in 2019. (7)

*But home price growth has started to slow down. The S&P CoreLogic Case-Shiller Index shows a year-over-year price growth of 19.7%. That's down from 20.6% in April. (8) Keep in mind that the Case Schiller index is a lagging indicator, and a lot has changed in the market since May.

As for consumer thoughts on the economy…

The Conference Board reports that confidence levels fell for a third month in a row to a reading of 95.7. Economists like to say that consumer spending is still robust, but the International Monetary Fund says that's at higher income levels. One member of the Conference Board, Lynn Franco, says that consumers will likely face "headwinds" over the next six months as they deal with inflation and additional rate hikes. (9) A survey on consumer sentiment by the University of Michigan shows similar results. It was up slightly at the end of July but is still near the lowest level on record. (10)

Mortgage Rates

Mortgage rates are falling as home buyers sit on the sidelines. Freddie Mac says the average 30-year fixed-rate mortgage was down 24 basis points last week to 5.3%. The 15-year was down 17 points to 4.58%. (11)

In other news making headlines...

Will the Latest Rate Hike Impact Mortgages?

The Fed's rate-hiking plan has created concern that mortgage rates will continue to move higher. The two are not directly related, although higher short-term rates often do influence mortgage rates. But NAR's Lawrence Yun doesn't think mortgage rates will move much higher this year. He says: "The long-term bond market on which mortgage rates are generally priced has mostly priced in all future actions by the Fed and may have already peaked with the 10-year Treasury shooting up 3.5% in mid-June." (12)

He feels that the 30-year fixed will settle down at 5.5 to 6% for the rest of the year.

That's it for today. Check the show notes for links.

If you'd like more news on the housing market, please go to newsforinvestors.com and check on other podcasts you may have missed. You'll also find hundreds of webinars and articles on the housing market at our website. If you haven't joined RealWealth, you can sign up for free. That will give you access to our investor portal where you'll find details on specific single-family rental markets.

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/fed-hikes-rates-by-0-75-percentage-points-and-signals-more-hikes-coming-11658944875?mod=home-page

2 -https://www.marketwatch.com/story/coming-up-pce-inflation-and-consumer-spending-11659096833?mod=economic-report

3 -https://www.marketwatch.com/story/coming-up-u-s-gdp-11659010141?mod=economy-politics

4 -https://www.marketwatch.com/story/was-feds-powell-dovish-or-not-4-key-takeaways-from-todays-press-conference-11658965985?mod=federal-reserve

5 -https://www.marketwatch.com/story/u-s-jobless-claims-retreat-after-hitting-highest-level-in-eight-months-11659012115?mod=economic-report

6 -https://www.marketwatch.com/story/u-s-new-home-sales-fall-in-june-to-the-lowest-level-since-the-pandemic-11658845189?mod=mw_latestnews

7 -https://www.marketwatch.com/story/u-s-pending-home-sales-tumble-in-june-11658930424?mod=mw_latestnews

8 -https://www.marketwatch.com/story/u-s-home-prices-slip-in-may-from-record-high-in-prior-month-case-shiller-11658840473?mod=economic-report

9 -https://www.marketwatch.com/story/u-s-consumer-confidence-declines-for-third-straight-month-in-june-11658845555?mod=bnbh_mwarticle

10 -https://www.marketwatch.com/story/consumers-pessimistic-about-inflation-and-the-economy-sentiment-poll-shows-11659104044?mod=economic-report

11 -https://www.freddiemac.com/pmms

12 -https://magazine.realtor/daily-news/2022/07/28/2nd-historic-fed-rate-hike-unlikely-to-further-damage-mortgage-borrowers

Best Investment Option During Times of Inflation? Aug 05, 2022

Show notes

The latest reports on inflation have given the economy indigestion. The Consumer Price Index hit 9.1%, the Producer Price Index hit 11.3%, and the Fed's preferred gauge, the Personal Consumption Expenditures Price Index or PCE, hit 6.8%. They are all signs that inflation is much too high and the reason the Federal Reserve just hiked short term interest rates another whopping three-quarters of a percent. So what's the best way to invest when inflation is working against you? (1, 2, 3)

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Four Peaks Capital put together a great list of all the options that I received in an email which I will share with you in this episode. The company is mostly focused on large multi-family projects, but this list pertains to everyone.

Investing Options

1 - First on the list is cash. It's not an investment as much as it is a way to preserve a certain quantity of money. But when there's a high rate of inflation, that same quantity of money will be worth less over time. As Four Peaks explains: Putting $100,000 under your mattress for something you want to buy in a year, won't cover the cost. At today's rate of inflation, you'll need an additional 9.1% or $9,100.

So hiding your money under the mattress isn't a great idea if you don't want to lose money. Warren Buffett would agree. He says: "The first rule of an investment is don't lose money. The second rule of an investment is don't forget the first rule." Let's take a look at your other options.

2 - You can invest in stocks. Wall Street is a magnet for investor enthusiasm and money, but people are often invested at the worst possible times. A period of inflation is typically one of those times. As inflation rises and the Federal Reserve raises rates, stocks often fall because it'll cost more money for companies to get the funding they need to do business. We've seen some major stock losses lately because of investor concerns on inflation.

3 - Crypto, Blockchain, and NFTs have become a new investment category, and it's gotten a lot of attention, but it's also very volatile. The crypto market had soared to a peak of about $3 trillion dollars, but when the economy got choppy, crypto got chopped. Investors liquidated their gains and the crypto market quickly shrank to just $1 trillion. The high-flying leader of the pack, Bitcoin, had actually hit $69,000 earlier this year but is now down to one third of that value.

4 - You can buy Certificates of Deposit, or CDs, as a more traditional and safer way to invest money. NerdWallet has a list of CDs, and its top choice is a CD with a fixed 5-year term at 3.35%. But even that percentage won't make you money because inflation is so high. At 9.1%, inflation wipes out the gain and leaves you with a -5.75% loss.

5 - You can put your money into a Money Market Account. But the interest you'll earn is even less than a CD. It's more like 1% right now, although that could increase as the Fed raises rates, but at 1%, you stand to lose -8% of your investment because of inflation.

6 - High-Yield Savings Accounts are another option. They are supposed to give you a better interest rate than money market accounts. But the extra bump in interest only reduces the loss you'd get from a CD by a tiny amount.

7 - Annuities can provide better gains, but they still don't offset today's rate of inflation. Four Peaks explains it like this: "Some of the best fixed-income annuity rates right now hover in the 4.5% range, but that doesn't take into account administration fees of 1-3% annually, putting real rates at 1.5% to 3.5%. In the best-case scenario, the annual loss of the best annuity is -5.6% when considering inflation."

8 - And then you have Treasuries. The 10-year treasury might give you 2.96%, but when you account for inflation, you end up with a loss of -6.41%.

So, we've run through "eight" investing options and none of them make your money grow when inflation is as high as it is. That leaves us with an eighth option that covers a lot of "ground," no pun intended. As Four Peaks puts it: "Cash flowing tangible assets tied to essential goods… that consumers will always need… like shelter." Four Peaks says: "That's why certain classes of commercial real estate like affordable housing will thrive in downturns."

9 - The ninth option is real estate. At RealWealth, we focus on single-family rentals which also provide a tangible asset that's in high demand. The foreclosure crisis produced the first big surge in demand for single-family rentals. And now we're seeing a new surge because people who can't afford to buy a home, still crave the single-family lifestyle.

We recently had an investor on my other podcast, The Real Wealth Show, who was not discouraged by today's market. Jimmy Vreeland believes that the housing market slowdown is providing an opportunity for investors to find deals, and there's no better time to buy real estate than the present. He says: "You don't wait to buy real estate. You buy real estate, and wait." In other words, the value of your real estate will go up in time. Jimmy talks about how you can maximize that potential with the "value add" concept.

Plus, when you borrow money, like most people do when acquiring real estate, you are getting another hedge against inflation. It's like the inflation is eating away at your debt.

If you are interested in hearing more about how to invest in real estate when prices are high, please check out Jimmy's interview. He's both entertaining and inspiring. You'll find it at newsforinvestors.com. Just click on the Learn tab. You'll find the interview under the Real Wealth Show with the title "Invest Now or Wait?"

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/coming-up-consumer-price-index-for-june-11657713665

2 - https://www.marketwatch.com/story/u-s-wholesale-prices-surge-again-and-signal-inflation-is-still-running-hot-11657802432

3 - https://www.marketwatch.com/story/coming-up-pce-inflation-and-consumer-spending-11659096833

Job Quitters Jul 29, 2022

Show notes

The quitting trend that started during the pandemic is still here, and it's not going away anytime soon. Job market trends are important to real estate investors because housing markets rely heavily where people are working. In this episode, you'll hear about how the job market has changed, why more workers are quitting or changing the way they work, and the kinds of jobs they are seeking. (1)

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

This quitting trend has been called The Great Resignation, but a new study by McKinsey and Co. describes it as The Great Attrition which is now turning into The Great Renegotiation. This is happening because more and more people are rethinking their work-life balance and renegotiating the terms of their employment with a greater emphasis on their personal lives.

The Great Renegotiation

To get an idea of the magnitude of the change we're seeing, data from the US Department of Labor shows the voluntary quit rate is 24% higher now than it was before the pandemic. Companies are scrambling to fill positions and keep them filled. In April of last year, there were 9.3 million job openings. Fast forward to May of this year, and there were 11.3 million job openings. That's an increase of two million unfilled positions.

As the McKinsey study points out, there's a huge mismatch between the number of available jobs and the number of workers eager to fill those positions. What the study reveals about the current situation is that many companies are trying to fill an abundance of traditional positions with traditional workers, and that's where things have changed. Although some 60% of workers are still traditionalists, according to this analysis, there's a growing number of workers who won't accept the old way of doing things.

The McKinsey analysis includes survey responses from 13,000 people in six countries who answered questions between February and April of this year. 6,294 were Americans.

One of the authors of the report, Bonnie Dowling, says of the work world: "This isn't just a passing trend, or a pandemic-related change to the labor market. There's a fundamental shift in workers' mentality, and their willingness to prioritize other things in their life beyond whatever job they hold." She says: "We're never going back to how things were in 2019." (2)

Why Are the Quitters Quitting?

The results show three patterns among the quitters.

1 - The first is a desire to "reshuffle" their careers. That's driving the reshufflers from one industry to another. In fact, 48% of the non-traditionalists are reshufflers. But the exchange of employees is not balanced so that some industries are losing more workers than they are getting in return.

2 - The second pattern shows a desire to "reinvent" their careers. That might take the form of an employee transitioning from a traditional full-time job to one that's not traditional. That could include work that's part-time, temporary, remote or non-traditional in some other way. 47% of the survey participants fall into this category.

3 - The third pattern is one the study calls "reassessing." That's when people quit their jobs altogether to take care of personal needs and reassess their priorities. They might quit to take care of children, older relatives, or even themselves.

Discontent Varies from Country to Country

The desire to quit varies from country to country with India at the top of the list for discontent. The study shows that more than 60% of the workers in India want to leave their jobs. The second highest level of discontent was in Singapore, at 49%. The other four countries in this study include Australia, Canada, the United Kingdom, and the United States. Taken together, 40% of the participants expressed a desire to quit within the next three to six months.

So what is it that makes a job that motivates workers to quit or to stay? The survey says that workplace flexibility is the most important factor in preventing employees from quitting. Meaningfulness of work is also right up there. Other factors include support for an employee's health and well-being, a safe workplace, and inclusivity. Geographic ties also play into this equation, although it could be a moot point with remote workers.

The things that drive employees away include a lack of adequate compensation. No surprise there. Following that, employees quit when the job doesn't live up to their expectations. It could be a lack of career development or advancement opportunities. They also want reliability and support from colleagues, and bosses that are caring and inspiring.

Five Worker Personas

But that's only part of the picture. The analysis shows a total of five worker personas with the traditionalists accounting for the largest share. They are the first type of persona and make up 60% of the workforce. The four other personas account for the remaining 40% and they are the ones who are most likely to quit in the next several months.

The second type of persona is the do-it-yourselfer. This type of employee places a high value on workplace flexibility, although a high wage offer could draw them back to the traditional workforce. The analysis says they are typically between 25 and 45 years old, and want more autonomy in their jobs. That could drive them to self-employment or non-traditional full- or part-time jobs, or gig work.

Third is the caregiver. These are the people who quit their jobs to care for others, and wind up passively looking for a new job. For them to return to the workplace, they need a flexible schedule and a lot of support.

Fourth are the idealists. This category includes students and younger part-timers, typically between the ages of 18 and 24. They don't have a lot of financial obligations yet, and are looking for work that is more meaningful. They want flexibility, career opportunities, meaningful work, and people in their work world that are reliable and supportive. Compensation is not as important.

Last but not least are the relaxers. These people don't really care if they have a job or not. They may be retired, or job optional, and might return to the workforce if the job is sufficiently important or meaningful.

Employees Have Raised the Bar on their Jobs

Dowling says of this work trend that: "People aren't tolerating toxic bosses and toxic cultures anymore, because they can leave and find other ways to make money without being in a negative situation." She says: "There are more opportunities for work now than ever before with our increased connectivity."

What this shift in worker mentality says to me is that a large number of people are reevaluating their work-life balance, and getting their lives into focus. That's not always easy to do because we are confronted with so many distractions.

My husband Rich is a professional coach and conducts a "Focused Investor" presentation at the end of each year. It helps people focus on where they are now, and where they'd like to be a few years down the road. You can do this at any time of the year by watching a replay of his latest presentation on YouTube. The clip is called: "The Focused Investor - Four Steps to Success in 2022."

And please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1 - https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/the-great-attrition-is-making-hiring-harder-are-you-searching-the-right-talent-pools

2 - https://www.cnbc.com/2022/07/20/40percent-of-workers-are-considering-quitting-their-jobs-soon.html

The Real Estate News Brief: A Supply Chain Fix, Housing Affordability, Rental Income Side Hustle Jul 26, 2022

Show notes

In this Real Estate News Brief for the week ending July 24th, 2022... how Yellen would like to fix the supply chain, a return to 2007 housing affordability, and the latest way to make rental income off your property.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Economic News

We begin with economic news from this past week, and reassurances from former Fed Chief Janet Yellen. She said during an interview on NBC's "Meet the Press" that the U.S. economy is slowing down, but says that a strong job market is proof that we're not in a recession. (1) Her words come before a week of important economic reports. Coming up in the week ahead, the second quarter GDP, inflation, consumer income and spending, and what is expected to be a three-quarter point rate hike by the Federal Reserve.

Let's rewind to this past week. Although hiring is strong, the government reports a jump in state unemployment claims. They were up 7,000 to 251,000. Wall Street economists had expected a slight decline in those initial claims. Currently, there are 1.38 million collecting unemployment checks. (2)

The housing market slowdown continues. Housing starts fell in June. the Commerce Department reports that they were down 2% in June to 1.56 million new home starts. That's also a 6.3% annual drop in starts and the lowest level since last September. Building permits were also down .6% to 1.69 million. Breaking the report down further, construction starts fell 8.1% for single-family homes while apartment starts were "up" 15%. The number for permits were similar. (3)

As a real estate investor, it's important to remember that the housing market is "local" so national numbers don't tell the whole story. The National Association of Home Builders issued a report on permits showing the top ten markets for single-family construction. At the top of the list is Houston, followed by Dallas-Fort Worth, Phoenix, Atlanta, Austin, Charlotte, Orlando, Nashville, Tampa, and Jacksonville. Despite the overall slowdown, some markets are still fired up. (4)

Demand is still strong for single family homes, but prices have gotten too high for some buyers. The National Association of Realtors says that existing home sales fell 5.4% to a seasonally-adjusted annual rate of 5.12 million homes in June. That's the weakest they've been since the start of the pandemic, and compared with last year, they are down 14.2%. (5) In addition to high home prices, sales are being impacted by higher mortgage rates and a lack of more affordably priced homes. (5)

Housing market conditions have weakened home builder confidence. The NAHB says the monthly confidence index dropped 12 points to 55 in July. That's a larger-than-expected decline, and the second largest since the association created the index. As a comparison, the index was at 80 last July. (6)

Mortgage Rates

Mortgage rates crept a little higher last week. Freddie Mac says the average 30-year fixed-rate mortgage was 3 basis points higher to an interest rate of 5.54%. The 15-year was 8 points higher to 4.75%. (7)

In other news making headlines...

Yellen on Supply Chain Issues

Yellen offered a suggestion for supply chain issues. She said that allied countries could strengthen their supply chains by "friend-shoring." The term is similar to "onshoring" which refers to production or operations within our borders. (8)

She says she's not discouraging trade with any country, but says that by working more with trusted partners, supply chains would be more resilient when there's some sort of global emergency or conflict.

Housing Affordability Near 2007 Level

Housing affordability is hovering near 2007 levels. A report by S&P Global Ratings shows that homebuyers will have to pay about 28% of their income on mortgage payments by the end of this year. That's the highest percentage since the first quarter of 2007. NAR guidelines state that a homeowner's mortgage payment should not be higher than 25% of their paycheck. (9)

That calculation is based on a 10% down payment. The analysis also shows that it will take entry-level buyers 11.3 years to save up for that down payment. It's more than twice as long as a pre-pandemic rate of five years.

Swimply

There's more ways than one to make money renting some part of your home. A website called Swimply makes it easy to rent out your pool for hours at a time. A CNBC Make It blog profiled an Oregon resident who spent $110,000 building a luxury pool ten years ago, and over the last two years has more than made that money back. (10)

He says it's important to know a lot about pool maintenance and water chemistry. He also says that he was a lot busier when there were fewer people doing the same thing because there are now a lot more pools for potential customers to choose from.

That's it for today. Join RealWealth for free here. Check the show notes for links, and remember to hit the subscribe button for the latest news on real estate, the housing market, and the economy. By subscribing, you'll have easy access to all past and future podcasts. If you like what you hear, we would greatly appreciate a review with lots of stars!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://apnews.com/article/inflation-economy-prices-janet-yellen-948009cdbc67f5b6f9742a35f7214feb

2 -https://www.marketwatch.com/story/u-s-jobless-claims-jump-to-highest-level-since-november-11658407332?mod=economic-report

3 -https://www.marketwatch.com/story/u-s-housing-starts-fall-in-june-for-the-second-straight-month-11658234929?mod=mw_latestnews&mod=u.s.-economic-calendar

4 -https://eyeonhousing.org/2022/07/slowdown-in-single-family-permits-in-may-2022/

5 -https://www.marketwatch.com/story/u-s-existing-home-sales-fall-for-the-fifth-straight-month-in-june-11658326211?mod=economic-report

6 -https://www.marketwatch.com/story/u-s-home-builder-confidence-plunges-in-july-nahb-reports-11658152827?mod=economy-politics

7 -https://www.freddiemac.com/pmms

8 -https://www.cnbc.com/2022/07/19/us-treasury-secretary-on-supply-chain-resilience-use-friend-shoring.html

9 -https://seekingalpha.com/news/3859754-us-housing-affordability-poised-to-fall-to-lowest-since-gfc-on-soaring-prices-rates

10 -https://seekingalpha.com/news/3859754-us-housing-affordability-poised-to-fall-to-lowest-since-gfc-on-soaring-prices-rates

11 -https://www.cnbc.com/2022/07/21/swimply-side-hustle-making-money-renting-backyard-pool-to-strangers.html

Foreign Investors Returning to the U.S. Real Estate Market Jul 22, 2022

Show notes

Foreign investors are returning to the U.S. real estate market after a pandemic-related dry spell. A new survey by the National Association of Realtors shows a big increase in the dollar value of properties bought by foreign buyers in the last year. They had all but disappeared during the pandemic, but are slowly coming back – especially now that most travel restrictions have been lifted which makes it easier to visit properties before they buy.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

The National Association of Realtors surveyed members about transactions they've done with international clients and released the results in a report called 2022 Profile of International Transactions in U.S. Residential Real Estate. (1) The transactions would have taken place between April of last year and March of this year.

NAR Report on Foreign Buyers

Foreign buyers purchased a total of $59 billion worth of existing homes during that time. That's an 8.5% increase from the previous year, but inflation is contributing to that figure. The report also shows that the total number of properties fell 7.9% because you can't buy as much house for your money right now.

So how many homes did that money buy? According to NAR, international buyers purchased a total of 98,600 existing homes. That's 2.6% of the 6.12 million homes that changed hands over the last year.

NAR's chief economist Lawrence Yun believes that high home prices have discouraged some foreign investors. He said in the press release: "Affordability challenges along with the inability to find the right property were the top reasons given for prospective international buyers who showed interest but ultimately did not purchase a home in the United States."

He also believes that travel restrictions discouraged some potential buyers. He says: "For a second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers."

Two Groups of Foreign Buyers

The report separated foreign buyers into two groups including those who recently immigrated to the U.S. or live here on a visa and buyers who live in another country. The first group accounted for more transactions. It says that foreign buyers living here purchased just over $34 billion dollars worth of existing homes. That's up 5.2% from the previous year. Foreign buyers who don't live in the U.S. spent almost $25 billion during that same time period. That's up 13.2% from the previous year.

Buyers from China and Canada spent the most money. Chinese buyers spent $6.1 billion while Canadian buyers spent $5.5 billion. Rounding out the top five are buyers from INdia, Mexico, and Brazil.

The most popular destination for international buyers was Florida, for a 14th year in a row. Almost 25% of the homes bought by foreign buyers were in Florida. California was second on that list followed by Texas, Arizona, New York, and North Carolina.

Foreign Buyer Forecast

Yun is expecting to see an increase in the number of international buyers over the next year, despite high home prices and supply chain issues. He says the strong dollar may also discourage a some buyers, but overall, he says: "Many are purchasing in all cash, so the swings in the dollar are not a deal breaker."

He says that U.S. properties still appear inexpensive when you compare them to other countries. As CNN Business reports, a typical property in Hong Kong costs $28,570 a square meter. (2) One in London costs $26,262 a square meter. And in Toronto, it's $10,947 a square meter. Head over to Miami and you only pay $3,170 a square meter. Even San Francisco is cheap, at $8,250 a square meter.

Yun told CNN: "Maybe it is a good thing they were absent when US real estate was super hot," said Yun. "No one really missed the foreign market, but given the current shift in the market, with more inventory and homes staying on the market, it might begin to pick up as more international travel is possible."

Higher inventory levels are also good for U.S. investors. It's more difficult to find the best deals because of high home prices, but it's not impossible. If you'd like help in figuring out how to find a good deal for your money, you can do that at RealWealth. You need to be a member, but it's free to join at newsforinvestors.com. That will give you access to our network of resources, including our investment counselors.

And please remember to hit the subscribe button, and leave a review!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.nar.realtor/newsroom/annual-foreign-investment-in-u-s-existing-home-sales-climbed-8-5-to-59-billion-ending-three-year

2 -https://www.cnn.com/2022/07/18/homes/foreign-home-buyers-2022/index.html

The Real Estate News Brief: Big Surge in Housing Inventory, Rent Growth Rocket Ship, Supersized Social Security COLA Jul 19, 2022

Show notes

In this Real Estate News Brief for the week ending July 16th, 2022… a big surge in housing inventory, the rent growth rocket ship, and a supersized prediction for Social Security's 2023 COLA.

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Economic News

We begin with economic news from this past week, and another surprise surge in the consumer price index. The Labor Department says the consumer price index or CPI rose 1.3% last month. That puts the annual rate of inflation at a 41-year record high of 9.1%. That's up from 8.6% in May. The core rate was a little more encouraging. It excludes food and fuel because those prices are so volatile. That was up .7% for June, which brought the annual rate "down" a tenth of a percent to 5.9%. (1)

Wholesale prices also jumped higher. The producer price index was up 1.1% in June, mostly due to higher gas prices. That raises the annual rate from 10.9% to 11.3% - for wholesale prices. Again the core rate offered better news. It was only up .3%. That brought the annual rate down slightly, to 6.4%. (2)

Inflation isn't discouraging consumer spending. The latest report on retail sales shows a solid 1% increase in June, but people are also buying things at higher prices. When you adjust for inflation, it appears that retail sales fell slightly. Senior economist for BMO Capital, Greg Daco, told MarketWatch: "American households are spending nearly as much money as they did earlier, but largely to keep up with higher prices, not to actually buy more stuff." (3)

Initial jobless claims crept higher. The Labor Department says there were about 9,000 more claims last week than the week before, for a total of about 244,000 applications. The number of continuing claims dropped by a lot more. They were down about 41,000 to 1.33 million. (4)

Mortgage Rates

Mortgage rates aren't sitting still. After a big drop the week before last, they were up 21 basis points last week. Freddie Mac says the average 30-year fixed-rate mortgage was 5.51%. The 15 year was up 22 basis points, to 4.67%. (5)

In other news making headlines...

Home Buyers Canceling Contracts

More and more home buyers are backing out of their contracts because of the high prices. A new Redfin report says home sale cancellations were just under 15% in June. That's the highest level of contract cancellations since the start of Covid, when the economy briefly shut down. One year ago, in 2021, home buyers were canceling about 11% of their deals. (7)

Redfin's deputy chief economist, Taylor Marr, says we're seeing the increase for a number of reasons. One is that home buyers have less competition and more time to back out of a deal if inspections or appraisals don't go their way. They may also get a higher mortgage rate than they expected and discover they no longer qualify for a particular home. Or they may feel that home prices will decline and they could get a better deal by waiting. There's also worry about a recession, and how that could impact their paychecks.

Housing Inventory Rebound

Meantime, a slowdown in sales is having a positive impact on inventory, which is quickly increasing. Calculated Risk reports that it was up 3.2% over the July 4th weekend. That's unusual because it's typically a busy weekend for homebuyers, and inventory levels are usually flat or slightly lower. (8)

On a year-over-year basis, inventory is up around 32%, but the inventory problem has not yet been resolved. It's still at historically low levels. While it's up year-over-year compared to last year, it's down 25% compared to the same week in 2020.

Soaring Rents Could Be Peaking

With more and more homebuyers getting priced out of the market, rental demand is strong, and that's pushing rents higher. The Labor Department says the rent of a primary residence was .8% higher in June that it was in May. That's up from a .6% increase the month before. (9)

Some economists say that rent growth "may" be peaking. Moody's chief economist, Mark Zandi, says: "Market rent appears to be topping out, as renters are not able to afford the higher rents and are balking." He says: "More rental supply is also coming." RealPage reports that 836,000 multifamily units are under construction, which is the most since 1973.

Huge COLA Predicted for Social Security

People getting Social Security could get a big pay raise next year. The Senior Citizens League is estimating a 10.5% cost-of-living adjustment, which is also known as a COLA. The exact amount will depend on what kind of inflation we see for the rest of the year. (10)

The average monthly social security check is $1,668. A 10.5% increase would bump that up $175 to a total of $1,843

That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!

You can also get more in-depth information about the housing market at our website. We have hundreds of articles and webinars that you can check out for free. It's also free to join for access to resources that could help you find and purchase rental properties around the country.

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/coming-up-consumer-price-index-for-june-11657713665?mod=economy-politics

2 -https://www.marketwatch.com/story/u-s-wholesale-prices-surge-again-and-signal-inflation-is-still-running-hot-11657802432?mod=economic-report

3 -https://www.marketwatch.com/story/u-s-retail-sales-climb-1-in-june-but-higher-prices-a-big-reason-why-11657889085?mod=economic-report

4 -https://www.marketwatch.com/story/u-s-jobless-claims-rise-to-highest-level-since-last-november-11657802226?mod=newsviewer_click

5 -https://www.freddiemac.com/pmms

6 -https://www.wealthmanagement.com/multifamily/rents-us-rise-fastest-pace-1986-buoying-inflation

7 -https://www.calculatedriskblog.com/2022/07/housing-inventory-july-11th-update-up.html

8 -https://www.wealthmanagement.com/multifamily/rents-us-rise-fastest-pace-1986-buoying-inflation

9 -https://www.cnbc.com/2022/07/13/social-security-cost-of-living-adjustment-could-be-10point5percent-in-2023.html