The Real Estate News Brief: Year-End Optimism, Surge in Home Sales, SFR Investor Pay Raise

In this Real Estate News Brief for the week ending December 25th, 2021... why consumers are feeling optimistic about the economy, the latest surge in home sales, and which investors are getting a nice pay raise. 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 a busy Christmas holiday. There's now just one week left to the year, and economists say the economy is showing signs of strength despite the current COVID-19 surge. Last week, the number of Americans filing for unemployment benefits held steady at just over 200,000 applications. That's below pre-pandemic levels, which were averaging about 220,000 per week. The number of people already collecting checks shrank a bit, to 1.86 million, which is slightly higher than the pre-pandemic level of 1.7 million. Although the holidays could be skewing those numbers somewhat, Rubella Farooqi of High Frequency Economics feels they are heading in a good direction. She said in a MarketWatch report: "The data can be noisy during the holidays, but filings continue to trend down on strong demand for workers amid a labor shortage. The risk now is from new virus variants which are forcing businesses to voluntarily close in response to rising infections." (1) November ended with an inflation rate of 5.7%, as the nation deals with the Covid-19 Omicron variant. That's up from 5% in October and the highest level we've seen since last summer when the Delta variant was surging. (2) But inflation doesn't appear to be impacting consumer confidence this time around. Consumer spending rose .6% in November (3) and the Conference Board's index was up several points for December. Conference Board President, Steve Odland, says consumers may feel less concern at this point, because it appears the Omicron variant is not as dangerous as Delta. He said on CNBC's Power Lunch last week: "Part of that may be simple Covid fatigue… but also Omicron is less lethal than prior versions and I think that's giving people more confidence all the way around." (4) Real estate continues to be one of the strongest parts of the economy. New home sales hit a seven-month high in November. They were up 12.4% to a seasonally adjusted annual rate of 744,000. That's up from 662,000 in October, although that was heavily revised from about the same number we're currently getting for November. So the November number could change. But economists say the housing sector is strong with a median sales price of $417,000. That's a new record high. They are also expecting price growth to slow when the Fed starts raising interest rates next year, to control inflation. (5) Existing home sales were also strong in November. The National Association of Realtors says they were up 1.9% to a seasonally adjusted annual rate of 6.46 million. That's a 10-month high, and the third month in a row that they've increased, despite the inventory issue. NAR says inventory levels were down 13% compared to November of last year, but surveys done by Redfin.com show a rise in the number of homeowners planning to sell in the early part of next year. (6) Mortgage Rates And homebuyers can still get a screamingly good mortgage rate. Freddie Mac says the 30-year fixed-rate mortgage was down 7 basis points last week to 3.05%. The 15-year was down 4 basis points to 2.3%. (7) In other news making headlines… Single-Family Rental Rates Rent growth for single-family homes is turning into a generous pay raise for investors. The latest report from CoreLogic shows that rent levels were up 10.9% year-over-year in October and that vacancy rates are at 25-year lows. (8) CoreLogic economist, Molly Boesel, says it's the sixth month in a row that rent growth has hit a new high for single-family homes. She says it's rising in lock-step with higher home prices, and that: "Rent growth this October was more than three times that of a year earlier." And last year was a good year because of the Covid migration to the suburbs and single-family homes. The metros showing the highest growth rates are Miami with a 29.7% year-over-year increase, Phoenix with a 19.3% increase, and Las Vegas with a 16.5% increase. The best rent growth has also been for higher-priced rentals. 2022 Homebuyer Strategies High home prices have left many wannabee homebuyers in the rental market, but realtor.com says they are optimistic about their ability to buy a home in the coming year. The survey shows that more than a quarter of those shoppers were unable to buy a home and that many are planning new strategies for 2022. (9) Among those strategies are plans to make all-cash offers or larger down payments if possible, making offers above the asking price, and writing home seller love letters which are currently frowned upon and illegal in the state of Oregon. 22% of those surveyed say they plan on going over their budget for a home, and 13% plan to make an offer on a home they haven't seen in person. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! You can also join RealWealth for free at newsforinvestors.com. As a member, you have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.marketwatch.com/story/first-time-jobless-claims-unchanged-at-205-000-in-week-ended-dec-18-11640266598?mod=economic-report 2 -https://www.marketwatch.com/story/coming-up-latest-read-on-the-feds-favorite-inflation-gauge-11640265116?mod=economic-report 3 -https://www.marketwatch.com/story/coming-up-latest-read-on-the-feds-favorite-inflation-gauge-11640265116?mod=economic-report 4 -https://www.cnbc.com/video/2021/12/22/the-conference-board-survey-shows-inflation-concerns-down-from-13-year-high.html 5 -https://www.marketwatch.com/story/new-home-sales-surge-in-november-11640272086?mod=mw_latestnews 6 -https://www.marketwatch.com/story/existing-home-sales-rise-for-third-straight-month-in-november-11640185309?mod=bnbh_mwarticle 7 -http://www.freddiemac.com/pmms/ 8 -https://magazine.realtor/daily-news/2021/12/21/rental-rates-for-single-family-homes-triple-from-2020 9 -https://magazine.realtor/daily-news/2021/12/20/first-timers-reevaluate-devise-plan-to-compete-in-2022