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:

Why Are So Many Homebuyers Canceling Contracts? Jul 16, 2022

Show notes

Home buyers are getting cold feet because of high home prices and mortgage rates. A new report from Redfin shows the number of buyers canceling deals is now the highest it's been since the beginning of the pandemic. The pullback is also impacting builders. A report by John Burns Real Estate Consulting says they are lowering prices as they try to offload inventory.

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 Redfin report shows that homebuyers canceled 15% of the deals that went under contract in June. That's about 60,000 deals and the highest percentage of cancellations since the early days of the pandemic. About a month ago, in May, 12.7% of the deals were canceled. And about a year ago, that figure was 11.2%. (1)

More Homebuyers Canceling Deals

Analysts say buyers may have different motives for canceling their purchases including the possibility that home prices might go lower in the coming months, and they might get a better deal if they wait. For those who don't want to wait, there's less competition and that's giving them more negotiating power.

Redfin's deputy chief economist, Taylor Marr, says there are fewer buyers willing to waive inspections and appraisals, for example. By doing that, they have more time to weigh the pros and cons of a deal and get out if something turns up during the inspection, or the home doesn't appraise.

The Redfin report also says that some homebuyers simply don't qualify with the higher mortgage payments. Marr says: "If rates were 5% when you made the offer, but hit 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for the loan."

Redfin says that Las Vegas has the highest percentage of cancellations in June at 27.2%. Several Florida cities that have seen strong home price growth are high on the list along with New Orleans, Phoenix, and Houston. It's a long list that ranges from the Las Vegas high to a low of about 2.6% in Newark, New Jersey. Metros that had at least 1,000 pending home sales in June were included in this analysis.

Home Builders Lowering Prices

Home builders are also seeing higher cancellation rates. A report from John Burns Real Estate Consulting says 9.3% of new home deals were canceled in May. That's almost three percent higher than May of last year. (2)

John Burns' senior vice president, Jody Kahn, says: "Buyer's remorse and cancellations shortly after contract are increasing. Builders say that buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline."

The cancellation rate for homebuilders varied from region to region within each state. The John Burns research shows the highest cancellation rate at 27% in parts of Texas, and the lowest in some parts of the Southeast at 8%. That research shows that a quarter of the home builders are lowering their prices. A builder in Austin, Texas, told Realtor.com: "Sales have fallen off a cliff. We're selling ⅓ of what we sold in March and April."

Housing Inventory Turn-Around

One positive impact of this high-price environment is an increase in inventory. A TV station in Texas reports that: "Major housing markets in Texas are finally seeing the beginning of a housing inventory rebound." (3) As you may know, six months of inventory is considered normal for a balanced housing market. We're not seeing that yet, but this report says the numbers are rising in Houston, San Antonio, Dallas Fort Worth, and Austin.

Many homebuyers are getting priced out of the market, but the need for housing will not go away. That creates an opportunity for investors, despite the high prices. A recent guest our other podcast, The Real Wealth Show, isn't discouraged by the high prices. His strategy: "You don't wait to buy real estate. You buy real estate and wait." In other words, cash flow will come to those who wait for properties and rents to appreciate. The episode is called: "Invest Now or Wait?" with Jimmy Vreeland. You'll find it under the "Learn" tab and "The Real Wealth Show."

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

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.redfin.com/news/home-purchases-fall-through-2022/

2 -https://www.realtor.com/news/trends/scary-times-builders-are-slashing-home-prices-and-slowing-construction-as-buyers-pull-back-survey-shows/

3 -https://www.wfaa.com/article/money/business/right-on-the-money/major-housing-markets-finally-seeing-the-beginning-of-a-housing-inventory-rebound/287-346525d9-e3f1-4806-a2a9-121940badc45

The Real Estate News Brief: Job Market Strength, Mortgage Rate Turn-Around, Airbnb's OMG! Fund Jul 15, 2022

Show notes

In this Real Estate News Brief for the week ending July 9th, 2022... why the job market is reducing recession anxiety, the big mortgage rate turn-around, and Airbnb's contest for unique listing ideas.

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 job market is showing a lot of muscle, despite concerns about a recession. The government reported last week that companies created a whopping 372,000 new jobs in June. That's well above Wall Street estimates for 250,000 new jobs. (1)

Companies may have a hard time filling all those positions however due to a severe labor shortage. As reported by MarketWatch, there are two open jobs for every person looking for one, or about 11.3 million job openings. (2) Layoffs are also at historically low levels, including the number of people working part-time because they had their hours reduced. The report says there are 3.6 million involuntary part-timers. That's the lowest level in 21 years. (3)

Despite that good news, the unemployment numbers are up slightly for last week. The Labor Department reports that initial claims were up 4,000 last week, to 235,000. That's the highest level in six months. They were as low as 166,000 just four months ago. (4) But unemployment is still at 3.6% and the big picture is that job creation and hiring are strong. ZipRecruiter chief economist Julia Pollack says: "This is not what a recession looks like."

St. Louis Fed President James Bullard is also seeing signs of economic strength. He's predicting economic growth for the year despite the slowdown we're already seeing due to the Fed's rate hikes. He says he's basing his calculations on "gross domestic income" instead of "gross domestic product." The GDI is the income that's earned on the production of the GDP. While the GDP has already contracted in Q1 and may have done so in Q2 as well, Bullard says the GDI shows that the economy is actually expanding. (5)

Mortgage Rates

Mortgage rates did a big U-turn this last week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 40 basis points to 5.3%. The 15-year fell 38 points to 4.45%. (6) The drop in rates along with a 5.4% drop in mortgage applications is a sign that the housing market is cooling off. (7)

In other news making headlines...

On-Time Rent in Underwriting

Freddie Mac is making it easier for some renters to qualify for a mortgage. As of July 10th, Freddie is including on-time rental payments in its underwriting system. (8)

Freddie started encouraging landlords to report on-time rental payments to credit bureaus last November. It also offered an incentive in the form of closing cost credits for multifamily loans. That apparently attracted a lot of landlords.

HousingWire reports that 70,000 households within more than 800 multi-family properties are now enrolled, and that more than 15,000 renters have been able to establish credit scores. Fannie Mae began a similar program last year.

Rent Growth Slowdown

The latest rent report from Zumper shows a slowdown in rent growth. It says that rent levels typically peak during the summer because a lot of people are moving but this year, Zumper's National Index is up only .5 percent for one-bedroom apartments and down a big 2.9 percent for two-bedroom apartments. That lowers the national median price for a two-bedroom apartment to $1,707, and slightly increases the median rent for a one-bedroom to $1,421. (9)

Airbnb Party Ban Now Permanent

Airbnb's temporary party ban is now a permanent ban on "disruptive parties and events." That includes open-invite gatherings as well as one-night rentals for a large crowd. Airbnb initiated a ban on "party homes" after an Airbnb shooting in 2019 that killed five people. It then called for a global ban on Airbnb parties at the start of the pandemic. (10)

The global ban has reduced complaints by 44% but hasn't stopped them altogether. Airbnb says that people booking remote accommodations can often invite as many people as they want without getting caught. Airbnb says if they are caught, they could face consequences, including suspension or a permanent ban from the website.

Airbnb OMG! Fund

On a lighter note, there's still a few weeks left to participate in Airbnb's search for the craziest listing ideas, and the winners will get a hefty sum of money to make their crazy ideas a reality. Airbnb is funding the contest with a $10 million "OMG! Fund." That's enough money to give 100 people $100,000 each to help finance these projects.

The ideas will be judged on originality, feasibility, the experience the space will provide to guests, and sustainability. The deadline to apply is July 22nd. Check for a link in the show notes at newsforinvestors.com if you want to know more! The Airbnb announcement includes a lot of examples for inspiration.

That's it for today. Please remember to hit the subscribe button, and leave a review! And thank you for listening!

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/coming-up-u-s-jobs-report-for-june-11657282206?mod=mw_latestnews

2 -https://www.marketwatch.com/story/u-s-job-openings-dip-to-11-3-million-but-labor-market-still-historically-strong-11657122659?mod=economy-politics

3 -https://www.cnbc.com/2022/07/08/involuntary-part-time-worker-numbers-dip-to-lowest-level-in-21-years.html

4 -https://www.marketwatch.com/story/u-s-unemployment-claims-rise-to-6-month-high-of-235-00-in-possible-sign-of-rising-layoffs-11657197517?mod=jeffry-bartash

5 -https://finance.yahoo.com/news/feds-bullard-sees-continued-u-170206923.html

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

7 -https://www.marketwatch.com/story/mortgage-rates-fall-amid-rising-concerns-over-a-recession-11657203176

8 -https://www.housingwire.com/articles/freddie-mac-to-include-on-time-rent-payments-into-underwriting/

9 -https://realestateinvestingtoday.com/zumpers-national-rent-report-for-june-22/

10 -https://www.cnbc.com/2022/06/28/airbnb-makes-its-party-ban-permanent.html

11 -https://www.google.com/search?q=airbnb+omg+fund&rlz=1C5CHFA_enUS822US822&oq=airbnb+omg+fund&aqs=chrome..69i57j69i60.4025j0j7&sourceid=chrome&ie=UTF-8

Contrarian View on Negative GDP & Recession Jul 12, 2022

Show notes

Economists have been weighing each twist and turn of the economy to determine whether we are going "up" or "down." Many are predicting a recession at some point, while a few say we're already in a recession because the economy is contracting. But does this economy show the typical signs of a recession? One MarketWatch contributor doesn't think so.

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 you may know, two quarters of negative economic growth are usually interpreted as a recession. We've already seen negative growth in the first quarter. The economy contracted at an annual rate of 1.6%. And now, there are analysts and GDP trackers that are predicting the second quarter will decline as well. The Q2 numbers won't be out until the end of this month, but in the meantime, there are plenty of people looking at historical patterns to determine what might be happening, or not happening.

Economy Still Quite Healthy

MarketWatch contributor, Jeffrey Bartash, doesn't believe the typical definition of a recession will hold true this time around. He says the report we see on the "gross domestic product" is often reduced to simple headlines that don't tell the whole story, and that, right now, "many parts of the U.S. economy still seem quite healthy." (1)

For one, consumer spending and business investment both rose in the first quarter. Consumers are well employed with plenty of savings from the pandemic, while businesses are creating hundreds of thousands of jobs that they can't fill because of a labor shortage. The unemployment rate is 3.6% which is close to a 54-year low. That makes layoffs less likely, even if the economy sputters in the months ahead.

Blame the International Trade Deficit

But the economy did decline in Q1. Bartash says it's not because the economy is in bad shape. He says it's because of a surge in the international trade deficit, and that happened because of supply chain issues. Many companies placed bigger orders for foreign goods to "stock up." But the surge in goods coming into the country also made it look like our economy was slowing down.

There's a group of eight economists at the National Bureau of Economic Research who study all the details of a potential recession. Bartash says they pay special attention to hiring, unemployment, manufacturing, consumer income, and consumer spending, adjusted for inflation. And he says none of those data points support the idea of a U.S. recession, right now.

NBER's Definition of "Recession"

The NBER's definition of a recession is a little different than two consecutive quarters of negative economic growth. It says a recession happens when there's "a significant decline in economic activity that is spread across the economy and that lasts more than a few months." It also says that a downturn has to be "deep, broad, and long-lasting" before it's considered a recession.

We still have about three weeks before the official report comes out on the second quarter GDP. As Bartash points out, a lot can change between now and then, and between now and next year. This is why some economists are predicting a potential downturn or recession in 2023. But most agree, an economic slowdown has already begun.

As Senior Wells Fargo Economist, Sam Bullard, told CNBC: "There are certainly a lot of challenges ahead. The latest incoming data clearly signals there has been a loss of momentum."

Economic Challenges Ahead

A few weeks ago, the Federal Reserve lowered its full-year GDP estimate to just 1.7% from 2.8%. Both those numbers are substantially lower than last year when the GDP was 5.7%. (2)

The central bank lowered its outlook after it announced the biggest rate hike in 28 years to help curb inflation. It raised the Federal Funds rate 75 basis points, and is now planning to do the same at its July meeting. Fed Chief Jerome Powell has emphasized the need to fight inflation. The Consumer Price Index hit 8.6% in May.

Higher interest rates will help slow the economy by making money more expensive. It'll cost more for things like credit cards, car loans, business loans and adjustable rate mortgages. Fixed-rate mortgages are also impacted indirectly, and they've been shooting higher as well. The cost of a 30-year fixed rate mortgage has doubled since last fall from around 3% to around 6%.

Why Consumers Are Doing So Well

Economists feel that most consumers are doing well so far because unemployment is low and many are flush with savings. They didn't spend as much on things like clothes, gas, travel, and entertainment during the pandemic.. MarketWatch says that consumers have more than $2 trillion in "excess" savings. Many employees are also getting bigger paychecks because of the labor shortage and pay raises meant to keep them from leaving. All that helps offset higher prices.

According to the MarketWatch assessment, a lot depends on how much the Fed has to raise rates before we see inflation ease up. Some say we need to see improvement by the end of this year, and with short-term rates that don't go any higher than 4%. Other variables, of course, involve the war in Ukraine and the price of oil and grain that come from that region. And the supply chain squeeze that began during the pandemic and hasn't resolved.

Avoiding Recession with a Bit of Good Luck!

Higher interest rates that slow the economy could help producers catch up. But when it comes down to what makes or breaks the economy, it could be that we need a little bit of luck for things that are not in our control outside the U.S. Economist Oren Klachkin of Oxford Economics told MarketWatch: "The window for avoiding a recession is narrower today, but a downturn isn't unavoidable."

If you'd like to hear more about how the economy is impacting real estate and the housing market, I go into more detail on that topic in a recent webinar. It's my Housing Market Update for Q2. You can listen to the replay for free at newsforinvestors.com. You'll find it under the "Learn" tab.

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/the-u-s-wont-officially-be-in-recession-if-gdp-shrinks-again-and-heres-why-11657047088

2 -https://www.marketwatch.com/story/the-odds-of-recession-are-rising-but-the-u-s-economy-is-not-doomed-to-a-downturn-11655479959

New Home Prices & Whack-A-Mole Supply Chain Issues Jul 08, 2022

Show notes

The housing market may be slowing down, but new homes are still a complicated, expensive process, mostly because of supply chain issues. One Bank of America analyst, who co-authored a new report on residential construction, says it's like a game of whack-a-mole. He says: "Every time they find one thing that they fix, another one pops up."

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.

BofA just released its 2022 "Who Builds the House" report, which found that a shortage of building materials is one of the primary reasons for higher home prices. According to co-author Rafe Jadrosich, prices have risen at an "unprecedented rate" over the last few years because of the shortage of building materials. He told MarketWatch: "There's always a new category that's creating the bottleneck." (1)

"Who Builds the House?"

The report says that the cost of materials to build a home went up 42% in just three years, from 2018 to 2021, and that it has consistently outpaced the rate of overall inflation. Additional costs for materials add approximately $35,000 to the price tag, and bring the total amount for raw materials to around $118,000. That's about a third of the cost of a new home. The other two-thirds of the cost go towards the land, and the labor, which can vary from region to region.

Rising inflation is also contributing to higher costs for all the things needed to finish a home including window treatments, floor coverings, appliances, and household furnishings. MarketWatch reports that the index for household furnishings and operations rose .04% in May with an annual rate of increase of 8.9%.

The BofA report used data from the National Association of Home Builders, and analyzed 14 different expense categories, to determine how much it costs, on average, to build a new home.

Framing Lumber and Engineered Wood

The dominant category is the lumber needed to frame a home. Nine out of ten homes are framed with lumber. That can be natural wood or engineered wood, which is a mixture of wood fiber and plastic. The report says 30.2% of the material used to build a home falls into this category. The cost for this portion is about $35,500, and right now, lumber prices are falling. But they've also been on a roller coaster. Lumber futures have come off a high of about $1,700 for a thousand board feet in May of last year. They were recently down to about $580, but in April of 2020 they were half that amount.

Lumber prices are moving contrary to inflation because of a drop in home sales, and a cut back in home starts by builders. Home starts dropped a whopping 14.4% from April to May due to a slowdown in construction for both single-family and multi-family homes.

Higher mortgage rates are contributing to the housing market slowdown. Housing experts are predicting that lumber prices will come down farther, but builders are still dealing with high prices for other materials.

Concrete for the Foundation

Concrete accounts for another big expense category at almost 9% of the total cost of materials. It typically costs around $10,500 for the concrete.

Windows and Doors

Windows and doors are a big expense. They account for another $10,500 or about 9% of the cost of materials, but those costs are under pressure because windows and doors are consistently hard to find. Builders have been scrambling over the last year to get what they need to finish homes.

As Jadrosich explains, if you haven't installed the windows: "You can't put your appliances in, or paint your walls, or finish your floors." He says until that situation improves, "you're gonna have a pretty slow, elongated build cycle for a lot of the home builders." A recent New York Times article says it all in the title: "4 Bed, 3 Bath, No Garage Door."

((One of our RealWealth development projects experienced this kind of supply chain issue last year. The developer had to drive to another state to get the garage door he needed to finish the home.))

Other Materials

Other materials that builders must get their hands on include siding, plumbing, cabinets, HVAC systems, roofing, flooring, structural panels, wallboard and drywall, appliances, architectural coating, fiberglass insulation, and paint.

Housing Market Slowdown

Chief Economist for the NAHB, Robert Dietz, said in a recent press release that the cost of building a home is up 19% year-over-year. He says it's due to "a variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown." (4)

And builders are not happy. The NAHB does a monthly survey on builder confidence, and it's been lower for six months in a row. Dietz says it's a "clear sign of a slowing housing market in a high inflation, slow growth economic environment." He says: "The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates." He's calling on the government to create policies that support the supply-side of the housing market.

Housing Shortage

According to Freddie Mac, the U.S. needs an additional 4 million homes to keep up with demand. Since many people can't afford the high cost of homeownership, they will continue to rent. There's a problem that needs to be fixed in the housing market, but people need housing, and what's filling the gap right now are rentals.

If you'd like to learn more about how the economy is impacting the housing market, check out my recent webinar. It's my Q2 2022 Housing Market Update. You'll find it at newsforinvestors.com under the "Learn" tab.

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/the-cost-to-build-a-home-in-the-u-s-has-risen-at-an-unprecedented-rate-bank-of-america-says-11654897304

2 -https://www.nytimes.com/2022/02/15/upshot/homes-garage-door-shortage.html

3 - https://www.nahb.org/blog/2021/12/single-family-home-size-continues-to-trend-higher/#:~:text=According%20to%20third%20quarter%202021,family%20homes%20increased%20to%202%2C541

4 -https://www.nahb.org/news-and-economics/press-releases/2022/06/weakening-builder-confidence-points-to-economic-troubles-ahead

The Real Estate News Brief: Inflation Slows, GDP Results for Q1, Year-Over-Year Rent Growth Jul 07, 2022

Show notes

In this Real Estate News Brief for the week ending July 2nd, 2022... why inflation appears to be slowing, what the GDP says about a potential recession, and the latest reports on rent growth.

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 rate of inflation appears to have slowed a bit. The Personal Consumption Index, or PCI, was up .6% in May with a yearly rate that was unchanged at 6.3%, but the core rate was down slightly. The core rate doesn't include prices for food or fuel, and the yearly rate for that dropped from 4.9% in April to 4.7% in May. The Federal Reserve feels the PCI is more accurate than the Consumer Price Index or CPI, because the PCI factors in more variables, such as changes in consumer behavior. (1)

It's now official. The economy shrank 1.6% in the first quarter, and the Atlanta Federal Reserve is forecasting a negative reading for the second quarter as well. The Atlanta Fed GDPNow tracker indicates that the economy shrank 1% in Q2. Two consecutive quarters of negative economic growth is interpreted as a recession. But MarketWatch reports that some economists are forecasting growth in the second quarter. We won't have the official reading until the end of this month. (2)(3)

As concerns mount about a long-lasting recession, there are now predictions that the Fed will be cutting rates next year, not raising them. CNBC reports that most analysts expect the Fed to continue hiking rates until the end of "next" year, but global chief economist at UniCredit, Erik Nielsen, told CNBC: "Can you really hike interest rates into a recession even if inflation is high? That would be unusual." Michael Yoshikama of Destination Wealth Management also feels that the Fed will reverse its course and cut rates by the end of "this" year. The predictions are all over the map however. The president of the Federal Reserve Bank of Cleveland, Loretta Mester, expects growth to slow but doesn't expect to see a recession. Ark Invest CEO, Cathie Wood, told CNBC that the U.S. is already in a recession. (4)

Initial jobless claims were down by about 2,000 last week, to a total of 231,000, but the four-week average is slightly higher. Continuing claims have continued to fall and are now back down to pre-pandemic levels. MarketWatch economists feel that layoffs may remain low because companies have already had a tough time filling positions, and won't want to let anyone go. (5)

Pending home sales have rebounded somewhat. The National Association of Realtors says they were up .7% in May after six months of declines. But there are still challenges ahead for the housing market. NAR's chief economist Lawrence Yun says: "Despite a small gain in pending sales from the prior month, the housing market is clearly undergoing a transition." He says: "Contract signings are down sizably from a year ago because of much higher mortgage rates." Year-over-year, they are down 13.6%. (6)

Meantime, home prices are up again. The S&P CoreLogic Case-Shiller 20-city index shows a 21.2% year-over-year increase in April. That's up from 21.1% in March. The Federal Housing Finance Agency reports a slightly slower rate of growth. It says that home price growth is up 18.8% year-over-year. (7) Construction spending was down slightly in May, but remained the same for new single-family and multi-family homes. (8) And consumer confidence hit a 16-month low in June, due to concerns about the economy, high prices, and the possibility of a recession. (9)

Mortgage Rates

The rise in mortgage rates took a break last week. Freddie Mac says the average 30-year fixed-rate mortgage fell 11 basis points to 5.7%. The 15-year dropped 9 points to 4.83%. (10)

In other news making headlines…

Homebuyers Lose Purchasing Power

A new study shows that a typical homebuyer has lost more than $100,000 in purchasing power because of high interest rates. Redfin says that a homebuyer that can afford $2,500 a month in mortgage payments can only buy a home worth about $400,000 right now, or $120,000 less than they could at the end of last year. For someone who can afford $3,500 a month, the budget cut is more like $165,000. (11)

Redfin's chief economist Daryl Fairweather says: "Many house hunters now need to consider smaller homes – perhaps farther from their ideal neighborhood – or stick to renting if they're priced out of the market altogether."

Rent Growth Hot, but Slowing

Rents continue to rise across the country, but the pace is slowing down. The latest report from CoreLogic shows that single-family rents continue to move higher. The year-over-year rate in April was 14%. That's more than double what it was in April of last year. (12)

And CoreLogic economist, Molly Boesel, doesn't see it slowing down anytime soon. She says: "We expect single-family rent growth to continue to increase at a rapid pace throughout 2022."

A new report from "Apartment List" shows similar rent growth for apartments. The year-over-year increase for July is 14.1% but the report says that apartment rent growth is slowing down. It was 17.8% year-over-year at the beginning of the year. (13)

That's it for today. Check the show notes for links. You can also find out more about how changes in the economy are impacting the real estate market by listening to one of my recent webinars. It's called "The Changing Tides of 2022: How to Prepare as a Real Estate investor." You'll find the webinar under the "Learn" tab on our website at newsforinvestors.com.

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

I'm Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/coming-up-pce-inflation-and-consumer-spending-11656591128?mod=economic-report

2 -https://www.marketwatch.com/story/its-a-wrap-u-s-first-quarter-gdp-shrank-1-6-the-second-quarter-isnt-looking-much-better-11656506598?mod=federal-reserve

3 -https://www.fastcompany.com/90766283/recession-fed-gdp-tracker-atlanta

4 -https://www.cnbc.com/2022/07/01/fed-could-cut-interest-rates-in-2023-analysts-say-after-rate-hikes-this-year.html

5 -https://www.marketwatch.com/story/jobless-claims-inch-lower-in-latest-week-11656592825?mod=economic-report

6 -https://www.marketwatch.com/story/u-s-pending-home-sales-rebound-in-may-reversing-a-six-month-decline-11656338457?mod=economic-report

7 -https://www.marketwatch.com/story/home-price-growth-continues-slows-in-april-case-shiller-says-11656422745?mod=bnbh_mwarticle

8 -https://www.marketwatch.com/story/u-s-construction-spending-fell-marginally-in-may-271656686288?mod=search_headline

9 -https://www.marketwatch.com/story/consumer-confidence-falls-to-16-month-low-on-worries-about-inflation-and-economy-11656425418?mod=economic-report

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

11 -https://www.cnbc.com/2022/06/28/rising-interest-rates-cost-typical-homebuyers-16-percent-of-purchasing-power.html

12 -https://www.corelogic.com/intelligence/april-jump-in-us-rent-price-growth-puts-pressure-on-inflation-corelogic-reports/

13 -https://www.apartmentlist.com/research/national-rent-data

House Reps Ask Investors: "Where Have All the Houses Gone?" Jul 06, 2022

Show notes

Members of Congress are taking a deep dive into the single-family housing market to find out "Where Have All the Houses Gone?" In this investigation, they took a close look at the business practices of the nation's largest landlords – the institutional landlords that buy huge lots of homes at one time. Although the results show an adverse impact on certain communities and potential homebuyers, housing experts argue that investor ownership of rental property is more of a symptom than a cause. (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 investigation began last fall when a subcommittee of the House Committee on Financial Services sent a survey to five of the largest single-family rental companies in the U.S. Asked to participate in this survey were Invitation Homes, American Homes4Rent, FirstKey Homes, Progress Residential and Amherst Residential. The survey dug into things like where they are buying homes, what they are paying, how much rent they are charging, etc. The final analysis used that information along with government data to come up with a few conclusions.

Mass Predatory Purchasing

The subcommittee just held a hearing on the results last week. Subcommittee Chair, Representative Al Green, said during the hearing: "We have found that private equity companies have bought up hundreds of thousands of single-family homes and placed them on the rental market." He referred to this practice as "mass predatory purchasing." He also said:"These corporate buyers have tended to target lower-priced starter homes requiring limited renovation; these homes would likely have been bought by first-time buyers, low- to middle-income home-buyers, or both." (2)

The investigation also found that a disproportionate number of homes have been purchased in communities of color, and communities with a higher number of single mothers. An examination of the top 20 zip codes where institutional investors have purchased show that about 40% of the population is Black while just 13.4% of the overall population is Black. The number of single mothers is reportedly about 30% higher than average.

Other findings include rents that are up 40% over three years from 2018 to 2021, and a doubling of the number of tenants who are behind on their rent. Lawmakers were also critical of automated property management, often used by institutional investors. They say if tenants can't get a hold of someone about a problem, they could be at risk of mismanagement and eviction when problems occur. (3)

Investors as a Symptom, Not the Cause

Even though the numbers have grown, Representative Tom Emmer sided with landlords, and reminded hearing attendees that 8.6% inflation is having a big impact on housing. He also said that institutional investors still account for a very small percentage of single-family rentals, which appears to mean that they couldn't possibly be a huge part of the problem.

Jenny Schuetz of the Brookings Institution also testified that these big investors are not the cause of the housing gap. She says they are a symptom, because of the high demand for rentals and the critically low inventory of affordable homes. She says: "Private equity firms and other institutional investors benefit from tight housing supply, but they did not create the problem. Local governments across the U.S. have adopted policies that make it difficult to build more homes where people want to live."

The Executive Director of the National Rental Home Council, David Howard, also spoke out at the hearing. He answered the question about where all the houses have gone in a similar way – that they were never built. He also says that "single family rental home providers are not influencing local and national housing market dynamics." In other words, they are "responding" to housing market dynamics.

Collaboration to Find a Solution

Howard says that these large landlords along with The National Rental Home Council have been working with the committee, and welcome the opportunity to continue with that collaboration to find meaningful solutions to this problem.

In the meantime, landlords are needed to help fill the housing gap. You can find out more about the housing market, the rental market, and the economy by listening to one of my recent webinars. You'll find a replay for my Q2 2022 Housing Market Update at newsforinvestors.com under the "Learn" tab.

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

Thanks for listening. I'm Kathy Fettke.

Links:

1 - https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409611

2 - https://www.marketwatch.com/story/institutional-investors-have-bought-hundreds-of-thousands-of-single-family-homes-many-in-black-communities-critics-say-its-creating-a-generation-of-renters-11656514935

3 - https://nationalmortgageprofessional.com/news/congressional-committee-exploring-where-have-all-houses-gone

The Real Estate News Brief: Fed's Inflation Promise, Home Price Cuts, Top Homebuyer Destinations Jul 01, 2022

Show notes

In this Real Estate News Brief for the week ending June 25th, 2022... what the Fed Chief is promising about inflation, what's happening with home price cuts, and top destinations for home buyers, and investors.

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. Fed Chief Jerome Powell expressed his resolve, once again, to control inflation, but also warned that the Fed's aggressive interest rate hikes could result in some job losses. The Fed raised rates by three-quarters of a percent at the June meeting, and is planning to hike it again in July by either a half or three-quarter percent.

Powell acknowledges that the Fed misjudged the risk of inflation and should have moved faster with the rate hikes. Powell said: "We did underestimate it. With the benefit of hindsight, clearly we did." He says Fed officials anticipated a speedier end to the pandemic and supply chain issues, but that supply chain problems "remain problematic." (1)

Unemployment claims were down slightly last week, but they remain at a five-week high. Economists say it's a sign that the job market is cooling off although there's still a record number of job openings, and not enough employees to fill them. According to MarketWatch, 34 states and U.S. territories show a "decline" in jobless claims, while 19 show an increase. (2)

New home sales picked up in May. The Commerce Department reports they were up almost 11% to a seasonally-adjusted annual rate of 696,000. That's a big jump from the April numbers which came in at 629,000. They are still down 5.9% for the year however. Home price growth is slowing, thanks to rising mortgage rates. The median sales price for a new home was $449,000 in May. That's down from a record high of $454.700. (3)

Existing home sales were down in May, for a fourth month in a row. According to the National Association of Realtors, they were down 3.4% to a seasonally adjusted annual rate of 5.41 million. There are far fewer existing homes for sale than new homes. While the supply of new homes could last more than 7 months, the supply for existing homes is just 2.6 months. The median price for an existing home has hit a new record high of $407,600. (4)

Consumer confidence is dropping as inflation continues. The University of Michigan consumer sentiment index shows it fell to an all-time low of 50 in June. 50 is considered the mid-point between positive and negative on a scale of 100. Consumers are unhappy about high prices and the impact on their standard of living. (5)

Mortgage Rates

Mortgage rates continue to move higher. Freddie Mac says the average 30-year fixed-rate mortgage rose 3 basis points to 5.81%. The 15-year was up 1 basis point to 4.92%. (6)

In other news making headlines…

Sellers Are Cutting Prices

We're starting to see more price cuts for listed homes. Data real estate firm Redfin says that almost one out of five home sellers lowered their price in May. That's the highest rate of price cuts since October of 2019. (7)

Zillow economist Nicole Bachaud told Market Watch that it's a sign of the housing market rebalancing. She says: "The share of listings with a price cut is creeping up, possibly a sign that sellers cannot be quite as ambitious in their pricing strategy as they coil have in recent months." She says homes are selling as fast as they ever have, and the typical homes is selling in seven days for more than the listing price.

Homebuyers Love Florida

Redfin also did a little research on current trends for homebuyer destinations. It says that buyers are chasing after affordability, and that found that two Florida cities topped the destination list in April and May. Miami was number one as it has been all year, and Tampa pushed Phoenix out of the way for second place. (8)

Tampa has become very popular since the start of the pandemic. Prices are up 28% year-over-year, but Tampa remains relatively affordable. A typical Tampa home sells for around $370,000. The national median is $424,000.

Redfin says that Tampa is attracting a lot of newcomers from New York and the Northeast. Redfin says it's also attracting a lot of investors, which we, at RealWealth, can attest to. It's a strong market for rental properties, including single-family homes.

You can find out more about buying single-family rentals by going to our website at newsforinvestors.com. It's free to join, and free to talk to our investment counselors, and get access to our list of resources. Joining a network is also a great way to meet other like-minded investors like yourself.

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

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.cnn.com/2022/06/23/economy/fed-jerome-powell-house-testimony/index.html

2 -https://www.marketwatch.com/story/unemployment-claims-fall-slightly-to-229-000-but-labor-market-might-be-cooling-off-11655988191?mod=economy-politics

3 -https://www.marketwatch.com/story/u-s-new-home-sales-stronger-in-may-11656079765?mod=economic-report

4 -https://www.marketwatch.com/story/u-s-existing-home-sales-fall-for-4th-straight-month-in-may-while-prices-skyrocket-11655820059?mod=economic-report

5 - https://www.marketwatch.com/story/consumer-sentiment-drops-to-record-low-as-inflation-worries-grip-u-s-11656079725?mod=economy-politics

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

7 -https://www.marketwatch.com/picks/the-share-of-listings-with-a-price-cut-is-creeping-up-5-economists-and-real-estate-pros-on-what-the-housing-market-will-look-like-this-summer-01654028472

8 -https://www.redfin.com/news/may-2022-housing-migration-trends/

What's up with NONI Loans and Short-Term Rentals? Jun 29, 2022

Show notes

If history tends to repeat itself, you might wonder whether it's round two for the mortgage industry and the underwriting of risky loans – specifically, for short-term rental properties. It's easy to get into a short-term rental with a loan that's based on future rental income. It's not a new concept for real estate investors, but it's now becoming very popular for short-term rental investing as a way to pay for more expensive properties. On the other hand, it's possible to cover that expense with the expected income. But, what happens to that loan if, let's say, we have a recession and demand dries up for expensive short-term 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.

Non-Owner, No Income Loans

You may already know a bit about these loans. They are commonly known as NONI loans which stands for Non-Owner, No Income and are based on the future income of a property, and not on the borrower's paycheck. When a lender underwrites this kind of loan, they approve an amount for the purchase of the property that is proportional to future income. According to Realty411, it's typical to get up to a 75% LTV on loans up to $3.5 million. Borrowers don't need to show any income or employment, and they can be first-time investors because qualification is based on the expected cash flow from the property. (1)

Those are a few of the basics for a NONI loan. You might also hear them called "debt service coverage ratio" loans, but NONI has a nicer tone. It also means grandmother in Italian. One lender, called "The Lender," is capitalizing on that with an image of a grey-haired woman wearing heart-shaped glasses and flashing a peace sign. (2) What's not to like about that?

The ad says: "Our NONI likes Airbnb. The NONI program allows borrowers to use income from vacation rentals, like Airbnb and VRBO… Results without the B.S." So granny will get you a loan for your short-term rental business. Thanks granny!

Just to be perfectly clear about NONI loans, they are very common loans for real estate investors. And the real estate investing mortgage market has been booming, but it's unclear how much of that boom is due to short-term rental NONI loans.

Loans Based on Projected Rental Income

According to Inside Mortgage Finance, lenders issued almost $10 billion in loans to investors last year. That's eight times as much as they did in 2018. Most of those investors qualified for the loans based on projected rental income. Although there's no way of knowing how many were borrowing money for short-term rentals, it appears those numbers are growing.

Bloomberg says that rating companies have noticed more mortgages for properties without a lease or for properties with leases that are less than 90 days. "The Lender" told Bloomberg that it expects 60% of its rental-based loans for this year will qualify because of short-term rental income. (3)

As it stands, the default rate is usually higher for NONI loans. One analyst says that borrowers who qualify for these loans are three times as likely to default as those with conventional loans. And with an unsteady economy, and the idea of a potential slowdown in the short-term rental market, that could put those borrowers at a higher risk, especially if they are inexperienced.

"The Starry-Eyed Inexperienced Investor"

As former assistant director at the U.S. Consumer Financial Protection Bureau, Patty McCoy, told B;oomberg: "The influx of the starry-eyed inexperienced investor is artificially boosting demand and causing the rental market to be overheated." She says: "This whole class of loan and, in particular, some of these underwriting practices are a sign of market euphoria. That rarely turns out well."

Although some analysts see a parallel here with subprime mortgages that were approved with little or no income documentation, lenders say they underwrite these loans with great care. For one, borrowers must have exemplary credit, and lenders often require experience in the short-term rental market, or at least some amount of experience as a landlord.

Some lenders may have tougher requirements than the ones I previously mentioned. For example, Viseo Co-Founder, Jeff Ball, says that borrowers often need a 30% down payment and at least six months of funds in reserve to pay the mortgage. He says the loans that his companies underwrite perform extremely well. He says: "People with good credit have good credit because they have a history of paying their obligations in good times and bad times."

But he also acknowledges that in the event of a recession, and a cut back on travel, there could be trouble. He says: "It's an interesting question."

Will There be a Short-Term Rental Downturn?

Consumers are still whole right now. They saved money during the pandemic, and are now itching to get away. Many of them can also work remotely so a typically shorter vacation can be turned into a longer one. That puts money into the pockets of short-term property owners, and helps to pay for those NONI loans, but there's also another issue that STR investors need to keep in mind.

The need for long-term housing is putting more and more pressure on short-term operators. It's something that is impacting the housing market here in the U.S. and around the world. There's a headline in the news right now, about the housing shortage in Brisbane, Australia, and a warning that short-term operators will be slapped with a huge additional fee. Like many places, Brisbane has seen a huge surge in short-term rentals. There are cities in Southern California tourist destination hot spots that have stopped issuing new licenses. Many long-term residents also want the ones in operation to be phased out. It's a wildcard that could spoil the best of your short-term rental plans!

The best advice is to do your homework and make sure you know what's happening with demand and regulations. As you've heard me say before, real estate is the best way to build wealth, and there are many ways you can do that. But, you need to do your due diligence. You can find out more about how to invest safely by joining our network at newsforinvestors.com. It's free to join, and get your questions answered. While you are there, you can also check for links on this topic in the show notes for this episode.

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

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://realty411.com/the-non-owner-no-income-noni-loan-solution/

2 -https://retail.thelender.com/

3 -https://www.bloomberg.com/news/features/2022-06-14/airbnb-rentals-turn-into-real-estate-goldmines-with-easy-money-mortgages

Real Estate News Brief: Supersized Rate Hike, Mortgage Sticker Shock, Home Equity Bonanza Jun 22, 2022

Show notes

In this Real Estate News Brief for the week ending June 18th, 2022... the Fed's supersized rate hike, mortgage rate sticker shock, and the home equity bonanza.

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

Economic News

We begin with economic news from this past week, and the Fed's biggest rate hike in three decades. The central bank hiked the federal funds rate by three-quarters of a percent which puts it between 1.5% and 1.75%. If inflation doesn't show signs of slowing by next month, Fed Chief Jerome Powell said they might hike it by another three-quarters of a percent. He doesn't expect that to be a common practice, but he said the Fed is determined to get inflation back down to 2%. (1)

The rate hike came after two more hot inflation reports. The Consumer Price Index shows that inflation hit an annual rate of 8.6% in May, while wholesale prices came in at 10.8%.

Economists are now looking ahead to the CPI report for June as they anticipate the size of the next rate hike and whether higher rates will tip the economy into a recession. As reported by MarketWatch, the Fed has backed off the idea of a "soft landing" and is running the risk of a recession to get inflation under control. (2)

The Fed is currently expecting the economy to slow to 1.7% over the next year-and-a-half with inflation running at 5.2% by the end of this year and 2.6% by the end of next year. It anticipates a slight rise in unemployment, but expects the job market to remain strong.

Right now, jobless claims are low while job openings are high. There have been some reports of layoffs, which is contributing to recession anxiety. Last week, real estate companies Redfin and Compass announced layoffs, in response to a slower housing market. Redfin is cutting 8% of its staff, and Compass is cutting 10% because fewer people are buying homes. Many can't afford the high price of the home combined with a more expensive mortgage. (3)

The housing slowdown is also impacting residential construction. The Commerce Department says that housing starts dropped 14.4% in May to an annual rate of 1.55 million. That's the biggest decline since April of last year. Multi-family starts dropped the most - by 26.8%. Single-family starts were down 9.2%. Permits also fell but only by 7%. (4)

Mortgage Rates

Mortgage rates bolted higher last week, for the largest one-week increase since 1987. Freddie Mac says the average 30-year fixed-rate mortgage rose 55 basis points to 5.78%. The 15-year was up 43 points to 4.81%. On a positive note, higher mortgage rates will help control the crazy home price growth we've seen lately. (5)

In other news making headlines…

Mortgage Rate Sticker Shock

The rapid rise in mortgage rates is giving some homebuyers sticker shock. Even though mortgage rates are nowhere as high as they were decades ago, they are at their highest level since about 2008. And that's cutting into homebuyer budgets. (6)

The National Association of Realtors says that higher interest rates have chopped about 25% off the homebuyer's budget since the beginning of the year. As an example, NAR says that the typical buyer could afford a $360,000 home with a $1,400 monthly mortgage payment in January. Now, with higher interest rates, that buyer will have to shop for a $270,000 home if they want to maintain a $1,400 a month payment because a larger portion of the mortgage will go toward interest.

Homebuyers Are Embracing ARMs

One way that homebuyers are dealing with the cost of the loan, is by choosing an adjustable rate mortgage or what's known as an ARM. The Mortgage Bankers Association says that the number of ARMs doubled in May, to help keep initial payments lower. They were as much as a full point lower on the MAXEX exchange. (7)

According to the loan-trading platform, MAXEX is a network of 320 banks and nonbank originators, as well as 20 "high-profile investors." It says these lenders have been seeing explosive growth in ARMs and it expects the trend to continue.

Big Equity Gains for Homeowners

While price appreciation makes it tough to buy a home, most homeowners are feeling a whole lot richer. According to a CoreLogic report, 62% of all U.S. properties rose in value with an average gain of about $64,000. (8)

The states with the highest amount of appreciation were California and Hawaii with an average of about $140,000. Other red-hot states were Washington, Arizona, Utah, Colorado, and Nevada. The states with the lowest amount of average appreciation were Iowa at $17,000 and North Dakota at $19,000.

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

I'd also like to recommend a new book called "The Wise Investor" by RealWealth co-founder Rich Fettke. He wrote the book as an entertaining way to share what he's learned about creating wealth both financially and personally. The protagonist is a man who realizes his life is nothing like he had planned and sets off to change that. The reader is swept along for the ride. It's a quick read, and is currently available as a Kindle book on Amazon. The hard cover and audio versions are coming out in August but you can pre-order them now. You can also read more about the book here. (at realwealth.com/grow)

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/fed-lifts-rates-by-most-in-three-decades-anticipates-policy-rate-rising-to-3-8-by-end-of-2023-11655316254?mod=mw_latestnews

2 -https://www.marketwatch.com/story/as-fed-aggressively-raises-rates-here-are-4-takeaways-from-jerome-powells-press-conference-11655340311?mod=economy-politics

3 -https://www.cnn.com/2022/06/17/investing/premarket-stocks-trading/index.html

4 -https://www.marketwatch.com/story/u-s-housing-starts-plunge-in-may-11655383118?mod=u.s.-economic-calendar

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

6 -https://magazine.realtor/daily-news/2022/06/17/surging-mortgage-rates-spook-house-hunters

7 -https://www.housingwire.com/articles/maxex-report-shows-arms-doubled-in-may/?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_medium=email&_hsmi=216674568&_hsenc=p2ANqtz--7Is5ehx6QK5u6f15i-lFl9EfIiIrNoDk029qwgACHkfo3hZfA7lCOZovmqBlflCXrRa7iSat3Dq_i5TwJHWqKqwqWlQ&utm_content=216674568&utm_source=hs_email

8 -https://magazine.realtor/daily-news/2022/06/10/homeowners-see-12-month-equity-gain-of-64k

SFR Demand Grows as Mortgage Rates Rise Jun 20, 2022

Show notes

There's a lot of uncertainty in the economy right now as inflation pushes higher. The housing market is contributing to inflation with higher home prices, and now we're seeing higher mortgage rates. As potential homebuyers get priced out of the market, real estate investors see the need for housing as a big opportunity for 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.

Institutional investors have been very busy this year expanding their portfolios of single-family rental homes. As reported by HousingWire, they've sponsored at least 10 SFR securitization deals worth almost $8 billion. (1) ATTOM Data Solutions' Rick Sharga says: The historically low inventory of homes to buy coupled with (rental) vacancy rates hovering around 2.5%, have positioned SFR owners for success in today's housing market."

Strength of the Single-Family Rental Market

The institutional deals highlight the strength of the single-family rental market, but it's the "mom and pop" investors who are the biggest beneficiaries because the single-family rental market is dominated by small investors. According to rentalhomecouncil.org, 99% of single-family rentals are owned by smaller investors and 90 percent of them own fewer than ten units. (2)

But the Wall Street landlords are showing a lot of interest, and their share is growing. This trend is gaining momentum as potential homebuyers lose the battle against inflation, and the Fed tightens the belt on the money supply.

The Fed's recent decision to increase short-term lending rates by a whopping 75 basis points is the Fed's latest attempt to slow a hot economy. It's the biggest rate hike we've seen since 1994 and will raise borrowing costs for adjustable rate mortgages and other short-term loans.

Rising Mortgage Rates

It's not directly tied to the popular fixed-rate mortgage, but will impact mortgages through a complex set of economic relationships. That includes nervousness among investors, bond yields and the 10-year Treasury.

After more than a decade of low mortgage rates, the 30-year fixed-rate mortgage topped 6% last week. According to ATTOM, mortgage originations were down 18% from the Q4 of last year to Q1 of this year. Year-over-year, they were down 32%.

The biggest reason for the mortgage downturn is a decrease in refinancing. ATTOM says just 1.45 million home loans were rolled into new mortgages during the first quarter. That's 22% lower than the end of last year and 46% lower than a year ago.

According to Sharga: "The drop-ff in Q1 refinancing activity is no surprise with mortgage rates rising as rapidly as they have."

Renting Cheaper than Buying

Home prices are also keeping homebuyers at bay. According to John Burns Real Estate Consulting, it's now more costly to own a home than it is to rent one since the year 2000. The consulting group says it costs about $839 per month more to buy than to rent. (3)

John Burns senior research manager, Danielle Nguyen, says: "With demand now shifting toward renting, home builders who were once reluctant to sell to rental home investors are now soliciting offers from investors." She says: "Strong demand from investors will provide additional support to today's home prices."

SFR Opportunities for Investors

As dire as it may sound to hear about higher mortgage rates and expensive homes, demand for single-family rentals remains strong, and that's attracting more institutional investors. MetLife Investment Management told HousingWire that: "MIM believes that institutional SFR ownership is likely to grow significantly over the next decade." It expects that share to grow from 2% where it is today to around 10% in the future. Much of that growth will come from the new build-to-rent trend that's taking shape.

It isn't just the big landlords who are doing the build-to-rent thing. Although it's great that institutional investors might prefer to leave the existing home inventory to small investors and homebuyers, there are opportunities for small investors to own newly-built rentals. If you're a member of RealWealth, then you probably know that we work with with property teams who can provide that kind of rental unit to our members. If you'd like to know more about that, please go to newsforinvestors.com and sign up. It's free, and will give you access to our resources, including investment counselors and property teams. While you are there, you can also check for links on this topic in the show notes for this episode.

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

Thanks for listening. I'm Kathy Fettke.

Links:

1 -https://www.housingwire.com/articles/as-rates-skyrocket-wall-street-single-family-rental-investors-see-opportunity/?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_medium=email&_hsmi=216674568&_hsenc=p2ANqtz-9kKz4UtawEjJ2FBXak6h5mP0nz8HU01QcfNmJN26CMLgu3kR8V-0LQbz_pxwqztwv6NKfgARrR6Fz2zghXhhq6CKy2Gg&utm_content=216674568&utm_source=hs_email

2 -https://www.rentalhomecouncil.org/

3 -https://www.marketwatch.com/story/its-now-more-expensive-to-own-a-home-than-to-rent-one-than-at-any-time-since-2000-heres-what-that-means-for-house-prices-11655213808