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[Speaker] Kathy Fettke: In this Real Estate News Brief for the week ending July 17th, 2021... what the Fed says about the June inflation report, why there’s been a surge in listings, and where homebuyer love letters are now banned.
Hi, I'm Kathy Fettke and this is Real Estate News for Investors.
We begin with economic news from this past week, and an unexpected bump in the consumer price index. The government reported a .9% increase in prices for June. According to MarketWatch, that’s the largest monthly increase since 2008, mostly due to higher prices for used cars. But prices are also climbing for food, energy, clothing, plane tickets and hotels. The June bump brings the 12-month rate up to 5.4%. The core rate, which eliminates prices for food and energy, was also up .9%, but the 12-month rate is less. It currently stands at 4.5%. (1)
Fed Chief Jerome Powell told members of Congress that inflation has risen faster and higher than the central bank expected, but he still thinks it’s a temporary situation. He told the House Financial Services panel that prices will probably remain elevated in the coming months before they moderate. He cited three reasons. They include “base effects” because we are comparing current readings to last year in the midst of the pandemic, supply chain issues, and production bottlenecks. (2) The Fed plans to keep interest rates where they are for the time being and continue with the monthly bond purchases.
The number of people collecting unemployment continues to dwindle. Initial jobless claims were down to 360,000 last week, which is a new pandemic low. And the total number of people collecting benefits from any program offered by state and federal governments is 13.8 million. (3)
Consumers are worried about rising prices and the job market. The University of Michigan’s consumer sentiment index fell to a six-month low in July, from 85.5 to 80.8. That’s not a horrible number, but it shows that consumer sentiment hasn’t climbed back to pre-pandemic levels. (4)
That hasn’t stopped consumers from shopping and dining at restaurants however. Retail sales were up .6% in June, which beat forecasts, and are now up 18% for the past year. That’s better than they were before the pandemic. (5)
Mortgage rates are down again this week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 2 basis points week to 2.88%. The 15-year was also down 2 basis points and is now an average of 2.22%. The 30-year hit a recent peak of 3.18% in April. (6)
In other news making headlines...
More Homes Hit the Market
Sellers are finally making an appearance. According to Redfin, There was a jump in new listings last month. They were up 4% year-over-year in June, and 3% from June of 2019. Homeowners with plans to sell had been holding off during the pandemic. (7)
They were concerned about having people in their homes as well as being able to find a new one. CNBC reports that vaccines are giving them confidence about health concerns and an increase in inventory is encouraging them to go through with their plans.
Apartment Rents Surge Higher
The latest monthly rent report from Zumper shows that rents are rising across the country. It shows the median national rent for a one-bedroom apartment was up 4.9% in June to $1,315 a month. The median for a two-bedroom was $1,644. (8)
The report says: “Rents are on the rise in a major way. Nationally, rents jumped at a staggering rate, and the cities that experienced the biggest drops in rents during the pandemic are now starting to trend in the opposite direction.”
Buyer Love Letters Banned in Oregon
A new state law in Oregon prohibits homebuyers from sending love letters to sellers. Buyers try to endear themselves to sellers with warm and fuzzy stories about how much they love the home along with information about themselves. They may sound harmless enough, but the Oregon law prevents real estate agents from delivering those letters to sellers.
The National Association of Realtors has been warning agents that they are putting themselves at risk by getting involved with love letters in any state. It said in a blog last year: “These letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status.”
NAR says that agents should refuse all love letters from buyers. Oregon is the first state to ban them. (9)
Most Desirable Dream Home Features
Outdoor space has risen to the top of a list of priorities for the American dream home. A Buildworld survey shows that 66.3% of the participants want a garden more than anything else. Second on the list is a garage, and third on the list is natural light. In step with the idea of minimalism, having lots of storage is 15th on the list. (10)
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Thanks for listening. I’m Kathy Fettke.