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News Brief: Homebuilding Surge, Rents Head Higher, Best Days to List Apr 21, 2021

Show notes

In this Real Estate News Brief for the week ending April 17th, 2021... home builders are stepping on the gas, rents are headed "up" once again, and the best days to list your home.

Economic News

We begin with economic news from this past week. Federal Reserve Chairman Jerome Powell offered more clarity on when the central bank plans to start the tapering process. The Fed has been buying $120 billion worth of Treasurys and mortgage-backed securities each month since last summer as an economic shot in the arm. It also cut interest rates to zero. The Fed expects to begin tapering when the economy reaches full employment and a stable rate of inflation at 2% or slightly more. And, Powell says, that would happen well before any interest rate increases. After the 2013/2014 tapering process began, it took another two years for a rate hike. Powell says the Fed will follow a similar strategy. He didn't give a date as to when this would happen. Some economists are predicting that tapering will begin next year. Others say it could happen sooner.

Signs of inflation continue. Consumer prices have been higher for four months in a row, hitting their highest level in two-and-a-half years last month. The government says the index was up .6%, and the yearly rate of inflation is now 2.6%. Some economists say it could top 3% in the coming months which would put more pressure on the Fed to consider an interest rate increase. Because inflation turned negative during the early months of the pandemic, the yearly rate of inflation could also shoot higher when those low months drop out of the 12-month average. The Fed is predicting inflation will average 2.4% in 2020 and drop back down to 2% next year.

Initial jobless claims were down almost 200,000 last week to a pandemic low of 576,000. That's the first time that weekly state claims fell below 600,000 since the pandemic began. Another 131,000 people filed for help from a temporary federal program bringing the combined total to around 700,000. Continuing claims also dropped from 18.2 million to 16.9 million by the end of March.

Home builders are busy after a winter slowdown. The Census Bureau says that home starts jumped 19% in March compared to the previous month. Compared with March of last year, during the pandemic, they are up 37%. Permits are also up, but they took a smaller leap higher at 2.7% but the figures were higher for single-family homes than they were for bigger multi-family developments. In the middle of those two categories was a much bigger 25.5% surge in permits for two- to four-plex homes. MarketWatch says that might indicate a push for higher density housing to meet the demand.

And there is a new report out by Freddie Mac on the size of the housing shortfall. It says the U.S. housing market needs 3.8 million more single-family homes to keep up with demand. The shortage is more severe for entry level homes. Freddie Mac's chief economist Sam Khater says: "This is what you get when you underbuild for 10 years." Home builders have faced their own challenges, however. The housing crisis put many out of business, which has had a lasting impact. And now the pandemic has made it hard to get workers and created a lumber shortage among other issues.

Despite the shortage of homes for sale, consumer sentiment is running high. The University of Michigan says its index rose from 84.9 in March to 86.5 in April. That's the highest it's been since March of last year.

Mortgage Rates

Mortgage rates took another dip this last week. Freddie Mac says the average 30-year fixed-rate mortgage was down 9 basis points to 3.04%. The 15-year was also down 7 basis points to 2.35%.

In other news making headlines...

Many Remote Workers Won't Go Back to the Office

A new survey shows that a third of the people working remotely would rather quit their job than return to the office. Staffing firm Robert Half asked 1,000 people about what they would do, and one out of three said they'd rather look for a new job than return to the office full-time. But many felt that a fully remote job would damage their work relationships and that working from home was less productive. About half of the participants said they'd be happy with a hybrid arrangement.

Study authors suggest that companies adopt new policies when they try to lure employees back. Among the things that employees would like are flexible hours, relaxed dress codes, and more support for childcare. Having an environment that's safe from COVID is also important.

Rents are Rising Once Again

Rents are on an upswing once again, after an 8-month downtrend. Realtor.com's Monthly Rental report shows that rent growth was 1.1% year-over-year in March, in the nation's largest metro areas. Realtor.com's chief economist Danielle Hale says it's still below the 3.2% rent growth we saw before the pandemic, but she expects the pace will pick up from here as the economy recovers.

She also says: "Rents are not rising in all markets. The tech markets and several big metros like Chicago and Los Angeles continue to see rent declines." But those declines are also running at a slower pace. She also says that Americans may be more interested in renting as home prices and mortgage rates rise.

Best Days to List

New research shows that sellers who list their homes on Tuesday, Wednesday, and Thursday will sell faster and for more money. Redfin tracked home sales data from July 2020 to February of this year, and found out that on average, homes that were listed mid-week sold for $1,700 more. But depending on the home, some sellers are getting thousands of dollars more.

Redfin's chief economist, Daryl Fairweather, says: "The market is so competitive, most homes will receive plenty of attention regardless of when they are listed." But he says listing in the middle of the week provides more time for buyers to check out the home, and getting as many serious buyers interested will help drive up the sales price.

You can read more about all these stories by following links on the podcast player page for this episode at www.NewsForInvestors.com

Click here to join the network for free

Links:

1 - https://www.marketwatch.com/story/powell-suggests-fed-will-follow-the-2013-2014-playbook-when-it-starts-to-taper-asset-purchases-11618422986?mod=mw_latestnews

2 - https://www.marketwatch.com/story/consumer-prices-surge-again-as-u-s-inflation-marches-higher-11618317779?mod=economic-report

3 - https://www.marketwatch.com/story/u-s-jobless-claims-nosedive-193-000-to-pandemic-low-of-576-000-11618491022?mod=economic-report

4 - https://www.marketwatch.com/story/new-home-construction-rebounds-sharply-as-america-faces-dire-housing-shortage-11618577442?mod=economy-politics

5 - https://www.foxbusiness.com/real-estate/us-housing-market-is-nearly-4-million-homes-short-of-buyer-demand

6 - https://www.marketwatch.com/story/americans-are-feeling-the-best-theyve-felt-since-the-pandemic-began-consumer-survey-shows-11618582769

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

8 - https://www.bisnow.com/national/news/top-talent/third-of-remote-workers-would-quit-before-returning-to-office-108488

9 - https://magazine.realtor/daily-news/2021/04/13/rents-rising-for-the-first-time-in-eight-months

10 - https://magazine.realtor/daily-news/2021/04/15/best-time-to-list-midweek

Short-Term Rentals: Airbnb Launches "Summer of Responsible Travel" Apr 17, 2021

Show notes

Airbnb is taking another proactive step to prevent house parties over the Fourth of July weekend. It launched a new campaign called "Summer of Responsible Travel" which bans one-night rentals and last-minute bookings for guests who don't have a history of good reviews.

The July 4th holiday is turning into what many feel is the BIG REOPENING after more than a year of social isolation from the pandemic. Airbnb said in a statement: "We also know that public health and safety experts are still saying mass gathering should not happen." And that's why the short-term rental company is introducing the new rules. They are similar to ones that Airbnb implemented for Halloween and New Year's Eve last year.

Airbnb describes the summer travel initiative as an 8-point plan to help hosts, guests and communities remain safe. At the top of that list of rules is a ban on parties that could spread germs, and could also disturb neighbors. To help with the enforcement of this rule,Airbnb has expanded its community support staff by 50%.

Airbnb already has a global ban on parties, but the special holiday rules help provide hosts with more tools to keep things under control. The ban on one-night reservations for guests without a history of positive reviews will not apply to guests who have good reviews. People who have already booked a one-night reservation will also be able to keep them. Last minute reservations may also trigger more stringent restrictions, especially for people who live near the Airbnb they'd like to rent.

The short-term rental company is also helping superhosts who are worried about parties with discounts on noise monitoring devices. The devices measure decibel levels and can help hosts determine if a party is taking place. These devices can't be secretly used however. Hosts must disclose their existence on listing pages.

Other parts of the summer travel initiative include a Neighborhood Support Line with more Spanish-speaking monitors, house rules that are displayed more prominently on listing pages, safety tips for guests that are renting pool homes, and fire safety tips for people in fire-prone areas like the West Coast.

Airbnb is also reiterating the need for hosts to continue with COVID-19 Safety Practices. That includes wearing a mask, practicing social distancing, and disinfecting rentals with a 5-step cleaning process.

The issue that has probably caused the most short-term rental controversy is the noise issue. Many short-term vacation rentals or STVRs are located in residential neighborhoods where some long-time residents say there are too many loud parties by short-term rental guests. That may or may not be true in any particular neighborhood, but when enough voices are raised in opposition, elected officials are forced to listen.

And now, many city governments are struggling with rules to satisfy both long-term residents and short-term rental hosts. In many cases, the long-term residents are winning that battle, and city governments are completely banning short-term rentals. Unfortunately, that can feel like an injustice to property owners who may need that income, or have been planning for that income as an investment strategy.

The city of La Quinta, near Palm Springs, is one of those cities now wrestling with a decision on short-term rentals. It had implemented a ban on new short-term rental permits because of the pandemic that was supposed to be "temporary." But now, people opposed to short-term rentals want a permanent ban on new permits to reduce the number of short-term rentals in the city.

That set the stage for a lively debate at a recent City Council meeting, and the Council voted to extend the permit moratorium until June 1st as it tests a new noise monitoring program. It's a program that involves 25 properties and devices that measure noise levels. If the noise reaches a certain threshold, the property owner is notified and given a chance to address the problem.

Community Resources Analyst, Jaime Torres, told NBC news: "We reached out to three of the biggest vendors in the noise compliance industry. Each of these vendors has a device that helps monitor and track noise and our goal with this is to basically see whether these devices are effective."

Short-term rental owner, Kristen Perry, is one of the people participating in the test. She says: "So far so good!" She says: "I've yet to get an alert, and I have (the devices) at half the recommended setting."

If this strategy works to keep noise levels at an acceptable level, the devices could become mandatory for La Quinta vacation rentals. The results may also influence a vote on whether or not the ban on any new permits will be lifted.

If you'd like to know more about Airbnb's Summer of Responsible Travel initiative, you'll find a link on the podcast player page for this episode at www.NewsForInvestors.com

Click here to join the network for free

Links:

1 - https://www.inman.com/2021/04/13/partys-over-airbnb-rolls-out-new-plan-to-stop-summer-gatherings/

2 - https://nbcpalmsprings.com/2021/04/07/la-quinta-testing-noise-compliance-program-aimed-at-mitigating-stvr-complaints/

3 - https://news.airbnb.com/airbnb-launches-summer-of-responsible-travel/

Mortgage Industry: CFPB Proposes New Plan to Prevent a Surge in Foreclosures Apr 16, 2021

Show notes

There's a new plan brewing to help delinquent borrowers and prevent another wave of foreclosures. The Consumer Financial Protection Bureau wants to extend the foreclosure moratorium through the end of this year and is currently asking for comments on the plan. But does the CFPB have the authority to do this?

According to the Mortgage Bankers Association, 2.7 million homeowners were in forbearance programs as of January 31st of this year. That's down from a pandemic peak of some 6 million homeowners, but it's a substantial number of homes at risk of foreclosure.

Black Knight estimates the number of mortgages that are currently 90 or more days past due is about 2 million. And that's about five times higher than before the pandemic began. The real estate data firm expects some improvement through the end of June, when the current foreclosure moratorium expires, but it expects that 1.8 million mortgages will still be seriously delinquent.

The MBA says the delinquency rate for one-to-four-unit residential properties was 6.73% at the end of the fourth quarter. Black Knight says it fell below 6% in January, for the first time since the pandemic began.

Although the foreclosure moratorium is currently set to expire in June, delinquent homeowners may have different dates for the expiration of their forbearance programs. Loans backed by Fannie and Freddie can have as much as one year of forbearance. Private lenders may have other options.

Extending the foreclosure moratorium will give homeowners more time to work out a solution with their lenders. The CFPB is also proposing ways to streamline the process of getting homeowners out of forbearance and into other payment plans.

The MBA's CEO, Dave Stevens, feels the CFPB has gone beyond its authority in offering to extend the moratorium. Stevens told HousingWire: "My concern is that the bureau is overstepping its bounds and violating in essence agreements that have already been previously made."

He says that another halt on foreclosures could hurt the mortgage industry's relationship with its investors, which servicers have worked hard to maintain. According to Black Knight, service providers have advanced investors $19 billion for delinquent mortgage payments during the last year.

HousingWire also reports that lenders have already been doing a good job helping homeowners exit forbearance. It says that almost 86% of those who exited forbearance did so with a payment plan in place.

Executive Vice President of RealtyTrac, Rick Sharga, says of the results: "I think the math speaks for itself how well the forbearance program has worked, and it's one of the few times in my career that I have seen a government-initiated program adopted as well and executed as well by the industry as this one."

He doesn't feel the same way about another foreclosure moratorium however. He says: "What they are doing is getting involved in a very complex process and it may be forcing servicers to violate covenants of the investor who bought the loan, and that's the real challenge."

MBA President, Robert Broeksmit, is also citing some impressive numbers. He reportedly said in a recent article that mortgage servicers successfully helped 4.3 million Americans enter forbearance plans in less than 10 weeks. Broeksmit says: "The ability for the industry and mortgage servicers to overcome the obstacles created by COVID-19 will depend on our ability to work together."

The CFPB is proposing three actions to help borrowers impacted by the pandemic. The first is to grant borrowers more time, with a moratorium that runs through December 31st. The second is to give servicers a way to modify loans more quickly with less paperwork. And third, to improve communication with borrowers so they are aware of their options at the appropriate time.

The public comment period runs through May 11th.

You'll find links to the CFPB's proposal and other articles mentioned in this episode on the podcast player page at www.NewsForInvestors.com

Click here to join the network for free

Links:

1 - https://www.housingwire.com/articles/does-cfpb-have-authority-to-postpone-foreclosures/

2 - https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing_nprm_2021-04.pdf

3 - https://www.blackknightinc.com/black-knights-first-look-at-january-2021-mortgage-data/

4 - https://www.mba.org/2021-press-releases/february/mortgage-delinquencies-decrease-in-the-fourth-quarter-of-2020

5 - https://dsnews.com/daily-dose/04-05-2021/cfpb-proposes-plan-to-avoid-foreclosure-surge

The Real Estate News Brief: IMF Economic Forecast, Worldwide Home Price Growth, Pet-Friendly Workplace Apr 13, 2021

Show notes

In this Real Estate News Brief for the week ending April 10th, 2021... an economic forecast from the International Monetary Fund, home price growth around the world, and a survey on having pets at work.

Economic News

We begin with economic news from this past week, and an upbeat forecast from the International Monetary Fund. The IMF raised its 2021 U.S. economic outlook from 5.1% to 6.4%. It expects to see a slowdown next year to 4.4% which is stronger than the Federal Reserve's 3.3% prediction. The IMF also expects that pandemic-related losses for other major economies will be smaller than what we saw after the financial crisis. It is expecting global growth to be just slightly less than the U.S. this year, and about the same next year.

The IMF also expressed support for the Fed's "go slow" policy on interest rate hikes and tapering. The IMF's chief economist, Gita Gopinath, says: "They have pledged to, kind of, given sufficient advance warning if they are going to reverse course… so we expect that would happen."

Weekly unemployment claims jumped higher for a second week in a row. Economists had expected them to decline but the Labor Department reported 728,000 new state claims. That's 16,000 more than the previous week. Before the pandemic, the weekly average was around 220,000. If you combine all the new and continuing benefits from both state and federal programs, the total is 18.2 million. Before the pandemic, there were less than 2 million people collecting benefits.

On a positive note, job growth is surging. The government says there were 7.37 million jobs available in February. That's up from 7.1 million in January. It says that 5.74 million people were also hired in February, and the U.S. gained another 916,000 new jobs in March. Those are all good numbers.

Mortgage Rates

There's also good news on mortgage rates. Freddie Mac says the average 30-year fixed-rate mortgage dropped 5 basis points, to 3.13%. That's after seven weeks of higher rates. Freddie Mac says that mortgage rates are lower because of a "modest decline" in U.S. Treasury yields.

In other news making headlines...

Worldwide Home Prices

Home prices are going up around the world. International property consultant Knight Frank says that average urban home prices went up 5.6% last year. That's up from 3.2% in 2019. Emerging markets are seeing some of the strongest price gains, including Turkey which has a few cities at the top of the list. In Ankara, the year-over-year increase is 30.2%. Ismir and Istanbul are close to that. Turkish inflation is pushing those prices higher, but other countries are seeing double-digit year-over-year increases. Cities in Russia, New Zealand, Canada, and South Korea are all near the top of the list.

U.S. cities with double-digit price growth include Phoenix at 14.4%, Seattle at 13.6%, San Diego at 13%, Boston at 11.4%, Washington, D.C. at 10.3% and Minneapolis at 10.2%.

Higher Property Taxes for Homeowners

As home prices soar, so do home values and property taxes. ATTOM Data Solutions says that U.S. property taxes rose 5.4% in 2020. The average for single-family homes in 2020 was $3,719. That translates into an effective tax rate of 1.1% but researchers say many states have much higher tax rates. The highest is New Jersey with 2.2%. Illinois is second at 2.18%. And, Texas is third at 2.15%. At the low end is Hawaii with a tax rate of .37%.

CA Landlord Accepts Bitcoin for Rent

The Los Angeles-based real estate company Caruso announced that it will accept rent payments in bitcoin from residential and commercial tenants. Developer Rick Caruso founded the company which is known for high-end outdoor malls like The Grove in Los Angeles and a resort near Santa Barbara.

Caruso said during a CNBC interview that he hopes to create a whole ecosystem where tenants and guests can use cryptocurrency to check into a resort, pay rent, and buy things while visiting Caruso properties. He says it's a long-term strategy that anticipates what the world might be like in the next decade, and not just the next year or five years.

Pet-Friendly Workplace

The pet-friendly workplace could become more common as companies try to lure employees back to the office. A new survey shows that a lot of bosses realize how important pets have been during the pandemic and that many may allow pets at work.

In a survey by Banfield Pet Hospital and OnePoll, half of the executives said they are planning to allow pets at the office and 59% said they would adopt policies that give employees flexibility to take care of their pets.

One reason for this benevolent attitude is that 75% of the executives said that being a pet owner has made them better, more compassionate business leaders. There have also been a lot of employee requests for a more pet-friendly workplace.

If you want more information about any of these stories including home price growth in specific cities around the world and property tax rates for different U.S. states, you'll find links on the podcast player page for this episode at NewsForInvestors.com.

Links:

1 - https://www.marketwatch.com/story/imf-lifts-outlook-for-global-and-u-s-growth-11617712232?mod=mw_latestnews

2 - https://www.marketwatch.com/story/imf-backs-go-slow-fed-11617719428?mod=economy-politics

3 - https://www.marketwatch.com/story/jobless-claims-move-higher-for-second-straight-week-11617886018?mod=economic-report

4 - https://www.marketwatch.com/story/u-s-job-openings-climb-to-7-37-million-and-top-pre-pandemic-levels-as-economy-speeds-up-and-more-people-hired-11617718171?mod=economy-politics

5 - http://www.freddiemac.com/pmms/#

6 - https://www.worldpropertyjournal.com/real-estate-news/united-kingdom/london-real-estate-news/real-estate-news-knight-frank-2020-global-cities-index-2020-international-home-buyer-data-covid-19-impact-on-foreign-home-buyers-12450.php

7 - https://magazine.realtor/daily-news/2021/04/08/property-taxes-jumped-54-in-2020

8 - https://www.cnbc.com/2021/04/07/rick-carusos-company-to-begin-accepting-rent-payments-in-bitcoin.html

9 - https://www.inc.com/jessica-stillman/a-lot-more-post-pandemic-offices-are-going-to-be-pet-friendly-new-survey-says.html

Housing Market: Bidding Wars Are Creating Appraisal Problems for Some Buyers Apr 09, 2021

Show notes

Home buyers are making all sorts of sacrifices in today's market. Without enough homes to meet demand, some buyers are eliminating contingencies and offering way more than the listing price. That may be a simple transaction if you're paying cash, but for those getting a loan, a "gap" between the sky-high amount offered to clinch the deal and the appraised value of the home could be a deal breaker.

A lot of buyers are resorting to extreme measures to win the home they so desperately want to buy. They may offer $50,000, $100,000 over asking and waive ALL contingencies, meaning that if they back out, they lose their deposit.

And then when it comes time to get the house appraised, buyers are finding out that the lender will only cover, let's say, 80% of the appraised value. That means the buyer's down payment must include the other 20% PLUS any amount the buyer offered to win that home. That's left some buyers scrambling to make up the difference for what's being called "the appraisal gap."

HousingWire heard from a few loan officers who say that some people are caught off-guard, and are borrowing from relatives or tapping into retirement and stock-trading accounts to make up for that gap. Those distributions can also trigger tax events, making the purchase that much more expensive.

But the problem isn't just that buyers are bidding the prices too high. Some real estate experts feel that many appraisers have not caught up to a market that's been accelerating rapidly. They rely on historical data which doesn't reflect what's happening today. One Southern California processor told HousingWire that "almost all of the appraisals lately… have been low, by a lot."

HousingWire reports that: "While some appraisers understand the increasing market and try to justify soaring prices, others are not comfortable with the new reality and provide valuations more in line with previous sales."

The situation can lead to a costly mistake for buyers who have written a non-contingent offer. With no clause that allows them to back out of the deal, they must come up with the additional cash. If they can't, the deal will likely collapse and they'll lose their deposit. But it may also be possible to challenge the appraisal.

A buyer or buyer's agent might be able to offer comps that justify a higher amount, or maybe hire another appraiser for a second opinion. Finding another lender could also get you another appraisal but you'd have to make sure the new lender doesn't use the same appraiser.

Doing more to prepare for the appraisal gap could also help. Maybe getting those comps ahead of time, and making sure there's a little extra cash in the bank for a bigger deposit. If not, lower the dollar amount being offered, and maybe avoid an offer that doesn't give you an out.

Real estate agents can also help by educating their clients about the pitfalls of a non-contingency offer that's substantially over the asking price.

For real estate investors who'd like to learn more about appraisals for investment properties, you'll find a few videos on our website at NewsForInvestors.com. We'll also have a link on the podcast player page for this episode to those videos.

Video Link: https://www.realwealthnetwork.com/learn/how-to-read-appraisal-report-investment-property/

Links:

1 - https://www.housingwire.com/articles/the-appraisal-gap-is-complicating-deals-across-the-country/

2 - https://www.inman.com/2021/03/23/how-to-protect-your-buyers-from-appraisal-catastrophes/

3 - https://www.foxbusiness.com/money/how-to-refinance-mortgage-low-home-appraisal

Job Market: UC Researcher Predicts "Superstar Cities" Will Rise Again Apr 09, 2021

Show notes

Remote work has become a dream come true for many people. But, can it also become too much of a good thing? One UC Berkeley researcher predicts that cities will thrive again once the pandemic is under control. His arguments are compelling and support the idea of a metropolitan or suburban lifestyle with fewer days at the office and commutes that are easier because highways are less congested.

UC economist Enrico Moretti spoke with Vox about his forecast for the return of "superstar cities." He talks about how highly skilled workers like to congregate in different metros, and why that trend is probably not going to go away -- although some amount of the urban to suburban shift may remain. Living in the suburbs is still within driving distance of the city and many major companies, making it an attractive option for a hybrid work schedule.

The academic term for the clustering of different industries in certain cities is called "agglomeration." Moretti says it's one of the most important concepts for understanding why this happens. And he doesn't think it's going away. He says: "I think everything that we know from the economic geography before Covid tells us that these forces of agglomeration are quite powerful. And there's no reason to think that the same tendency to cluster will be all that different in the post-Covid world."

He explains that, for example, the biotech industry clusters geographically in three or four cities. That same goes for other industries, like finance and pharmaceutical. He says: "If you look at all the inventory in computer science, the top 10 metro areas in the U.S. account for 70% of all inventors in computer science." And it isn't just in the U.S. Moretti says over the past 20 to 30 years, you can see signs of agglomeration in industrialized countries around the world.

Moretti says one of the reasons for the growth of these clusters is that employees leave companies like Microsoft in Seattle, and start their own companies in the same area. But it's not just that. Moretti says that start-ups also want to tap into a labor force that is already specialized. Although many of these more specialized high-level industries can support remote work, Moretti feels that working remotely 100% of the time won't work well with the benefits of agglomeration.

What he does see is that more work will be done from home but that workers will live within commuting distance of their office. He says: "For the typical employer it's going to take the form of one work-from-home day a week, or at most two days of work-from-home a week." He says: "If you have to show up at the office three or four days a week, you still need to live in the metro area where your office is."

And it isn't all about work, either. Moretti says that people, especially the younger generations, are attracted to city amenities. The fact that cities like New York and San Francisco have looked deserted during the pandemic supports that argument because a lot of the urban amenities have been shut down.

He says that once people feel safe from COVID-19 and the amenities re-open, he expects all those well-educated workers will return to cities. If enough people end up working a hybrid work schedule, that could make cities even more attractive because there will be fewer people on the road, commuting.

The pandemic had many people thinking that cities were doomed as they moved to far flung areas that didn't have as many people, or germs. And there have been plenty of headlines about this pandemic migration. But just how far did they really move?

A report by retail traffic analytics firm Placer.ai supports the idea that while some people did move to other states, many people stayed closer to home. The results show that most U.S. states saw less than 1% population growth last year and that all that moving around was mostly to the suburbs, not other states.

The report shows that Montana and Idaho had the highest number of migrants at 3.7 and 3.9% respectively. Florida, Arizona, and Maine also did well with more than a 1% increase. Cities that were above the 1% mark include Tampa, Charleston, Austin, and Phoenix.

So there have been population growth hot spots. Many people have been moving to the Sun-Belt states, but it seems a larger percentage have just moved farther away from their nearby cities.

Expedia CEO, Peter Kern, published an opinion piece in Fortune that discredits the idea that cities will remain undesirable after the pandemic is over. He says: "The global health crisis we're living through is serious, and it will have lasting effects, but does anyone truly believe this event… is capable of fundamentally altering human nature?"

The human nature he is referring to is the desire for social interaction. When you think of being human, you don't think of living in social isolation. Kern says: "Maintaining close relationships with others is essential to our mental health and, ultimately, our survival."

He says he used to live 20 blocks from the World Trade Center and that after 9/11, many people were worried about a mass exodus. But the opposite happened. Kern says: "New York City witnessed booming real estate values, strong economic growth, inward migration, and yes, record tourism." He says: "People always find their way back to cities."

We don't know for sure what our post-COVID world will look like, but it looks like people may be more spread out in suburban single-family homes that are within commuting distance of their nearby cities.

You'll find links to these stories on the podcast player page for this episode at www.NewsForInvestors.com

Links:

1 - https://www.vox.com/22352360/remote-work-cities-housing-prices-work-from-home

2 - https://www.bisnow.com/dallas-ft-worth/news/commercial-real-estate/pandemic-forced-many-to-move-but-most-stayed-in-state-108370

3 - https://f.hubspotusercontent00.net/hubfs/5995051/Migration%20Trends%20Deep%20Dive.pdf

4 - https://fortune.com/2021/03/15/cities-covid-coronavirus-travel-expedia/

The Real Estate News Brief: Fannie Mae Update on GDP, Consumer Confidence Surge, Cicada Invasion Apr 07, 2021

Show notes

In this Real Estate News Brief for the week ending April 3rd, 2021... an economic update from Fannie Mae, a surge in consumer optimism, and the return of the cicadas.

Economic News

We begin with economic news from this past week, and an updated economic forecast by Fannie Mae. The mortgage guarantee enterprise is expecting real GDP growth to hit 8.4% in the second quarter of this year, and 6.6% for the full year. It is anticipating the GDP to settle down a bit in 2022. Currently, risks to the economic recovery are viewed as neutral. That includes the future path of COVID-19 and its variants, the easing of social restrictions, and whether consumers will start spending more money from their personal savings. The housing market is expected to remain resilient with purchases hitting $1.82 trillion this year. That's up from $1.61 trillion last year. Rising interest rates are not expected to have much of an impact. Fannie Mae's chief economist Doug Duncan says: "While we forecast some continued upward movement, mortgage rates remain historically low, as they are still .8 percentage points below the 2019 average." (1)

There was a spike in first-time unemployment claims last week, but economists are expecting numbers to go down soon, as the economy strengthens. The government says that state claims jumped to 719,000. Combined with claims for federal benefits, the total was "less" than one million. That figure fell below one million two weeks ago for the first time since the pandemic began. (2)

The March report on job growth shows a surprising surge in new positions. It says that companies created more than 900,000 new jobs with the largest percentage in the leisure and hospitality industry. But there were also a lot of new jobs for the government and the construction industry. MarketWatch says that job growth easily exceeded Wall Street expectations.

The official unemployment rate is now down to 6%, but that figure doesn't include about 4 million people who lost their jobs during the pandemic, and left the workforce. (3)

Pending home sales were down by a significant amount in February due to the lack of existing home inventory along with higher interest rates and homes prices. The National Association of Realtors says pending home sales were down 10.6%. They fell in all parts of the country, but they were down the most in the South with a 13% drop. (4)

Chief economist for Realtor.com, Danielle Hale, expects that home price growth will settle down as more sellers put their homes on the market this spring. But prices have already jumped quite a bit. According to the S&P CoreLogic Case-Shiller national price index, they were up 11.2% year-over-year in January. Phoenix has the highest price appreciation at 15.8%. (5)

We will need to see a lot of new sellers to help slow that price growth, and meet demand. Realtor.com's Monthly Housing Trends Report shows there are 52% fewer homes on the market this year than there were last year. And the national median home price is up 15.6% to $370,000 in March, which is an all-time high. (6)

The lack of existing homes is pushing many first-time buyers into the new home market. According to the National Association of Home Builders, new home buyers account for 43% of sales. That's up from 32% in 2018. (7)

Construction spending dipped in February, mostly because of severe weather in many parts of the country. The Commerce Department says it slipped .8%. It's still up 5.3%, however, compared to a year ago. And it's expected to bounce back rapidly this spring. (8)

Consumer confidence is surging. It hit a one-year high of 109.7 in March. That's up from 90.4 in February. The Conference Board survey was done as people received $1,400 stimulus checks and more people were vaccinated. (9)

Mortgage Rates

Mortgage rates didn't move much this last week. Freddie Mac says the average 30-year fixed-rate mortgage was only up one basis point to 3.18%. The 15-year didn't budge and remains at 2.45%. (10)

In other news making headlines...

Eviction Moratorium Extended

The CDC extended the national eviction moratorium another three months. It now ends on June 30th. The moratorium has been challenged by several states and local governments because it has left many landlords without rent payments to pay their own bills.

Landlords do have access to some amount of rental assistance from relief packages passed by Congress. The National Association of Realtors helped make that happen, but NAR'S chief advocacy officer, Shannon McGahn says: "Our focus now turns to ensuring there is not just enough funding but also a smooth implementation of rental assistance while the various challenges to eviction bans work their way through the courts." (11)

The Cicadas Are Coming

It's been 17 years since the last invasion of a bug called the cicada. If you're familiar with them, you probably know that they are expected to emerge from their underground hiding place this spring.

They are grass hopper-like bugs that shed their skin, and leave behind mounds of their sloughed-off exterior in the yards that they occupy. They are also very loud, and can be heard as far away as a half a mile.

States expecting this kind of invasion are located in the central east coast region, up through New York, New Jersey, and Pennsylvania then west toward the north central states.

You'll find links to all these stories on the podcast player page for this episode at www.NewsForInvestors.com

Links:

1 - https://www.fanniemae.com/newsroom/fannie-mae-news/economic-growth-expected-accelerate-through-spring-covid-19-lockdown-restrictions-ease

2 - https://www.marketwatch.com/story/new-unemployment-claims-jump-to-719-000-but-spike-likely-just-temporary-as-economy-strengthens-11617280807?mod=economic-report

3 - https://www.marketwatch.com/story/u-s-gains-916-000-new-jobs-in-march-and-signals-strengthening-economy-11617367042?mod=home-page

4 - https://www.marketwatch.com/story/americans-hit-the-brakes-on-home-buying-activity-last-month-previewing-a-challenging-spring-season-11617200281?mod=economic-report

5 - https://www.marketwatch.com/story/home-prices-are-rising-at-a-breakneck-pace-but-economists-say-that-could-soon-change-11617110818?mod=economy-politics

6 - https://magazine.realtor/daily-news/2021/04/01/spring-buyers-have-50-fewer-homes-to-choose-from

7 - https://www.worldpropertyjournal.com/real-estate-news/united-states/tampa-real-estate-news/real-estate-news-national-association-of-home-builders-wells-fargo-housing-market-index-march-2021-first-time-home-buyer-data-nahb-reports-covid-impac-12449.php

8 - https://www.marketwatch.com/story/us-construction-spending-drops-08-in-february-2021-04-01

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

11 - https://magazine.realtor/daily-news/2021/03/30/eviction-moratorium-still-in-effect

12 - https://magazine.realtor/daily-news/2021/03/29/prepare-for-the-return-of-the-cicadas

Future of Work: Adopting a More Flexible Employee-Employer Relationship Mar 31, 2021

Show notes

When the world shut down because of COVID-19, few people thought their work routine would change so drastically. It's now more than a year since the virus forced people into a remote work environment, and with the pandemic threat diminishing, there are big questions about the best way to shift to a more hybrid model that combines workplace with work-from-home.

www.NewsForInvestors.com

The Real Estate News Brief - State of the Economic Recovery, Co-Working Rebound, and a New Demand for Golf Course Homes Mar 31, 2021

Show notes

In this Real Estate News Brief for the week ending March 27th, 2021… the state of the economy from Treasury Secretary Yellen and Fed Chief Powell, what some see as a co-working rebound, and a new demand for golf course homes.

www.NewsForInvestors.com

Links:

1 - https://www.cnn.com/2021/03/23/economy/janet-yellen-jerome-powell-economy-recovery/index.html

2 - https://www.marketwatch.com/story/consumer-spending-sinks-in-february-and-inflation-creeps-higher-11616763768?mod=economy-politics

3 - https://www.marketwatch.com/story/u-s-gdp-growth-in-fourth-quarter-raised-slightly-to-4-3-11616677670?mod=economic-report

4 - https://www.marketwatch.com/story/u-s-unemployment-claims-sink-to-684-000-and-hit-lowest-level-since-pandemic-11616676886?mod=economy-politics

5 - https://www.marketwatch.com/story/new-home-sales-plummet-amid-bad-weather-but-analysts-remain-upbeat-on-construction-activity-11616508567?mod=economy-politics

6 - https://www.marketwatch.com/story/new-home-sales-plummet-amid-bad-weather-but-analysts-remain-upbeat-on-construction-activity-11616508567?mod=economy-politics

7 - https://www.reuters.com/article/usa-economy-sentiment-idUSAQN03Z34I

8 - http://www.freddiemac.com/pmms/

9 - https://www.housingwire.com/articles/about-7m-refi-candidates-missed-the-forever-rate-boat/#

10 - https://magazine.realtor/daily-news/2021/03/24/co-working-spaces-may-soon-see-a-surge-in-activity

11 - https://magazine.realtor/daily-news/2021/03/22/golf-properties-are-once-again-in-high-demand

12 - https://magazine.realtor/daily-news/2021/03/26/demand-for-pools-hot-tubs-surging-due-to-covid-19

New Construction: Pandemic Lumber Shortages Are Driving Prices Sky High Mar 29, 2021

Show notes

The push continues for a solution to lumber shortages and skyrocketing lumber prices. A large number of sawmills were shut down early last year, creating a major shortage of lumber for the construction industry. While there's hope that sawmills will return to full capacity as people get vaccinated and social distancing mandates are relaxed, the National Association of Homebuilders is urging policymakers to find solutions right now.

www.NewsForInvestors.com

Links: 1 - https://www.nahb.org/advocacy/top-priorities/material-costs/solving-the-lumber-crisis 2 - https://nahbnow.com/2021/02/record-high-lumber-prices-add-24k-to-the-price-of-a-new-home/ 3 - https://www.cnbc.com/2021/03/17/housing-starts-february-2021.html#:~:text=and%20construction%20activity.%22-,Housing%20starts%20fell%2010.3%25%20to%20a%20seasonally%20adjusted%20annual%20rate,on%2Dyear%20basis%20in%20February. 4 - https://nahbnow.com/2021/03/lumber-prices-stalling-much-needed-multifamily-and-affordable-housing-supply/?_ga=2.24865850.1827718439.1616712139-54843561.1614272299 5 - https://nahbnow.com/2021/03/a-full-court-press-on-lumber/?_ga=2.250824582.1827718439.1616712139-54843561.1614272299 6 - https://fortune.com/2021/03/20/lumber-prices-2021-chart-when-will-wood-shortage-end-price-of-lumber-go-down-home-sales-cost-update-march/ 7 - https://www.nahb.org/advocacy/top-priorities/material-costs/outreach-to-the-administration-and-congress?_ga=2.182658726.1827718439.1616712139-54843561.1614272299

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