Real Estate News: Real Estate Investing Podcast
Business:Investing
In this Real Estate News Brief for the week ending October 22nd, 2022... what’s ahead with the Fed’s next meeting, the decline of the urban office, and the hybrid workplace challenge.
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 forward-looking news about the Fed’s next meeting. Federal Reserve officials are set to hold their meeting on November first and second, and will likely approve a .75 rate hike. They will also be discussing the size of a potential rate hike in December that many economists foresee as a smaller increase. Fed Governor Christopher Waller said in a recent speech: “We will have a very thoughtful discussion about the pace of tightening at our next meeting.” (1)
The jobless rate went down by 12,000 applications last week as the effects of Hurricane Ian disappeared. Initial claims dropped to a three-week low of 214,000 which indicates that layoffs are still very low. Despite all the turbulence going on economically, the low numbers mean that the job market is still very strong. (2)
U.S. housing starts did a big reversal in September. They were up 13.7% in August, and dropped to a seasonally adjusted 8.1% last month. On an annual basis, they were down 7.7% in September. When you separate single-family homes from apartments, new single-family starts were down 4.7% and a big 13.1% for multi-families. Residential building permits were up 1.4% to 1.56 million which beat some analysts expectations. The numbers reflect weakening demand in the midst of high prices and shortages. (3)
Home builder sentiment is also suffering. The National Association of Home Builders’ monthly confidence report shows the index dropped eight points in October, to just 38. Anything under 50 is considered negative. It’s the tenth month in a row that the index has fallen and it’s now the lowest it’s been since August of 2012. Just one year ago, the index was at 80. (4)
Existing home sales continue to drop further, as the housing slowdown continues. According to the National Association of Realtors, they were down a seasonally adjusted 1.5% in September, to an annual rate of 4.71 million homes. It’s the eighth month in a row that existing home sales have declined. If you exclude pandemic interference with the market, sales haven’t been this low since September of 2012. Looking back one year, sales are off 23.8%. (5)
Buyers are being cautious as the market changes. The median price for an existing home was down in September from $389,500 to $384,800. Inventory is also dropping. It was down 2.3% to 1.25 million homes last month because many people are staying put, and not selling. Homes are typically staying on the market for 19 days, which is up from 16 days a month ago. Before the pandemic, homes were averaging one month on the market.
Mortgage Rates
Mortgage rates have topped 7% for some lenders, but Freddie Mac says the average rate for a 30-year fixed-rate mortgage is 6.94%. That’s up 2 basis points from the week before. The 15-year was up 15 basis points to 6.23%. (6)
In other news making headlines...
Urban vs. Suburban Office Space
Vacancies are rising for urban office space as leases expire, and companies change their workplace strategies. A report by Marcus & Millichap shows that urban office vacancies rose 550 basis points from the beginning of the pandemic until June of last year. They’ve risen more slowly since then, but they are still up 30 basis points since June to 18.6%. Meanwhile, suburban office vacancies have gone “down” 30 basis points, and rents are up 2.9%. (7)
The report in GlobeSt.com says that “suburban properties continue to be more resilient than their urban counterparts.” They are also much cheaper to rent at about two-thirds the price. This reversal is working well for some companies with employees who now prefer the suburbs, although decisions on return-to-work policies are still very much in transition.
The Workplace Transition
A recent survey by the Building Owners and Managers International says that 86% of the respondees feel that the office environment is still vital for a successful business, but 71% say they will continue on a plan to facilitate some amount of remote work even if Covid disappears entirely. Only 15% of both employers and employees support full-time remote work. (8)
One of the big questions is “how hybrid” should an office space be? Although each company will be unique in what works best, finding that sweet spot is difficult. Sociologist and author Tracy Brower says that some younger employees may want to spend more days at the office, but many employees want more emphasis on remote work.
Brower says: “People need plenty of choices about where, when and how they work” and that “a continuing conversation” is needed to answer questions concerning engagement, performance, and other workforce behavior. At this point, there’s no putting the genie back in the bottle.
That’s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!
If you’d like to find out more about real estate investing, please join RealWealth for free at newsforinvestors.com. As a member, you have access to our market data, and a Learning Center filled with articles that can help you get started.
Thanks for listening. I'm Kathy Fettke.
Links:
1 -https://www.wsj.com/articles/fed-set-to-raise-rates-by-0-75-point-and-debate-size-of-future-hikes-11666356757?mod=pls_whats_news_us_business_f
2 -https://www.marketwatch.com/story/jobless-claims-drop-to-three-week-low-of-214-000-as-hurricane-ian-effects-fade-11666269576?mod=bnbh_mwarticle
3 -https://www.marketwatch.com/story/u-s-housing-starts-retreat-in-september-dragging-down-u-s-growth-11666184699?mod=economic-report
4 -https://www.marketwatch.com/story/builder-sentiment-drops-to-the-lowest-level-since-2012-home-builders-say-the-situation-is-unhealthy-and-unsustainable-11666102293?mod=economic-report
5 -https://www.marketwatch.com/story/u-s-existing-home-sales-fall-again-as-housing-downturn-gathers-steam-11666274678?mod=economic-report
6 -https://www.freddiemac.com/pmms
Why the Increase in Single-Family Home Sales to Investors?
The Real Estate News Brief: Fed Meeting Minutes & Inflation, Single-Family Home Size, Millennials Destinations
What They Want in a Home: Buyer Preferences by Generation
The Real Estate News Brief: Mixed Results on Inflation, The Buzz from Fed Officials, Top Short-Term Rental Cities
“Factory of the Future” for Home Construction!
The Real Estate News Brief: Fed Officials on Rate Cuts, Income Needed to Buy a Home, Home Buyer Compromises
Rental Housing Gap Grows!
The Real Estate News Brief: Fed’s Forecast on a Rate Cut, Consumer Pullback Arrives, Odd Punishment for NY Landlord
Lunar Land Grab: Will the Moon Be Off-Limits if China Gets There First???
Home Buyers Off the Hook for Title Insurance?
The Real Estate News Brief: Disappointing Inflation Report, Housing Share of the GDP, CA Judge Strikes Down Single-Family Lots Splits
The Real Estate News Brief: Fed Chief Talks “Higher for Longer”, Moody’s Upbeat Rate Cut Prediction, Renters & Homeownership
How Will You Future-Proof Your Portfolio Against Climate Risks?
US Supreme Court Victory for California Property Owners & Developers!
The Real Estate News Brief: Rate-Cut Hopes Deflate, Price Impact on Construction, Property Tax Sticker Shock
Will Squatters Take Your Property? New Florida Law Says “NO”!
Investors Enjoy Sizzling Hot Housing Demand in DALLAS!
The Real Estate News Brief: Rate Cut Predictions, Major Cities Attracting Home Buyers, AI’s Impact on CRE
Beware of Scammers Who Use AI to Steal Real Estate!
The Real Estate News Brief: Another Hot Inflation Report, Rent Growth Turnaround, Fed Listening Session
Create your
podcast in
minutes
It is Free
The Commercial Edge: Unleash the Power of People
The emPOWERed Half Hour
U.S Property Podcast
Aligned Money Show
Dubai Property Podcast
The Ramsey Show
The Clark Howard Podcast