Real Estate News Brief: Fed’s February Rate Hike, Elon Musk as Homebuilder, Realtors Love ChatGPT

In this Real Estate News Brief for the week ending February 4th, 2023... another Fed rate hike with an encouraging forecast for the coming months, what Elon Musk is doing with Lennar in Texas, and why real estate agents are embracing an artificial intelligence chatbot called ChatGPT.   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 the past week. The Federal Reserve’s Open Market Committee hiked short-term rates by another quarter point, as expected. That raises the Federal Funds rate to a range of 4.5 to 4.75%. It’s the highest it’s been since October of 2007, and will likely go higher before the Federal Reserve is convinced that inflation is subsiding. During a news conference, Fed Chief Jerome Powell said: “While recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.” (1)   Economists are generally seeing at least one or two more quarter point hikes with the possibility of rate cuts after that. The weekly CNBC Fed Survey shows that 82% of participating economists are forecasting another quarter point hike in March as “baked in” with the possibility of a policy reversal after that, and rate cuts later this year. Only 51% are expecting a recession. That’s down from 60% in recent surveys, but normal projections for a recession are more like 20%. (2)   Jobless claims dipped again, despite recent layoff announcements. The government says there were 186,000 weekly unemployment applications which is down from 195,000 for the previous week. Ongoing claims were also down about 11,000 to a total of 1.66 million. According to MarketWatch, there has been a gradual increase of continuing claims since last spring which suggests that it’s taking longer for people to find new jobs, but the job market remains tight. (3)   The latest report on job creation shows that companies added 517,000 new jobs to the market in January while the unemployment rate went from 3.5% to 3.4%. That’s the lowest it’s been since 1969, and reflects the strength of the job market. Economist Sal Guatieri from BMO Capital Markets says of the report: “It raises serious doubts about the economy slipping into recession and the Fed ending its tightening cycle this spring.” (4)   Home price growth has slowed for a fifth month in a row. The S&P; CoreLogic Case-Schiller national index shows that it fell a seasonally adjusted .6% in November to an annual rate of 9.2%. The 20-city index was down .5% to an annual rate of 8.6%. Of those 20 cities, Miami, Tampa, and Atlanta topped the list for largest year-over-year gains, although prices are also lower in these cities. The only city with a decline in home price growth was Detroit but only by .1%. (5)   The amount of money spent on construction was down in December. The Commerce Department says it fell a seasonally adjusted .4% to $1.81 trillion. Wall Street economists had expected a flat reading. Single-family construction was down 2.3%. (6)   Mortgage Rates   Mortgage rates dropped a bit closer to the 5% range. Freddie Mac says the average 30-year fixed-rate mortgage was down 4 basis points to 6.09% while the 15-year fell three points, to 5.14%. According to Mortgage News Daily, the average 30-year rate has already dipped below that 6% threshold to 5.99%. The big dip came right after Fed Chief Powell softened his language about inflation after last week’s meeting and rate hike. Freddie says the lower rates will make it possible for as many as three million more people to qualify for a loan. (7) (8)   In other news making headlines…   Elon Musk Partners with Lennar in Texas   Elon Musk is expanding his footprint in Texas with a community of about 100 workforce homes. He’s teaming up with Lennar to build the homes in the Pflugerville area, north of Austin, where the Boring Company is headquartered.   The development is being affectionately called “Project Amazing” with some Musk-inspired street names that include: Boring Bulevard, Cutterhead Xing, Porpoise Place and Waterjet Way. (9)   Real Estate Industry Embraces ChatGPT   Real estate agents are embracing the artificial intelligence chatbot ChatGPT. Business Insider says realtors are using it for emails, property listings, social media posts, and newsletters.   According to Iowa real estate agent JJ Johannes: “It’s not perfect but it’s a great starting point.” He says the chatbot uses all the lingo you’d expect to see in a listing like “open floor plan” and “recently updated.” You can also add to the listing after it’s written if you think that details were left out.   Miami broker Andres Asion offered another example, he was unsuccessful at getting a developer to correct a problem with some windows until he asked ChatGPT to write the email as a legal issue. He says the developer showed up at the owner’s home shortly after that email was sent.   The artificial intelligence chatbot was introduced to the public just a few months ago. It is currently free to use, but some people are saying they’d gladly pay 100 to $200 a month for access.   That’s it for today. Check the show notes for links at newsforinvestors.com, and join RealWealth for more information about real estate investing. It’s free to join and get access to all our data including our virtual live event on February 11th. It’s called “Why You Should Invest in Real Estate in 2023” and features 11 property teams and 1 commercial broker. Once you sign up as a member, it takes about two seconds to register for the event at our website.   And don’t forget to subscribe to the podcast if you haven’t already, and leave us a review!   Thanks for listening. I'm Kathy Fettke.   Links:   1 - https://www.cnbc.com/2023/02/01/fed-rate-decision-february-2023-quarter-point-hike.html   2 - https://www.cnbc.com/2023/01/31/why-the-case-is-growing-for-a-fed-rate-cut-before-year-end.html   3 - https://www.marketwatch.com/story/u-s-jobless-claims-drop-to-nine-month-low-of-183-000-11675345085?mod=economy-politics   4 - https://www.marketwatch.com/story/u-s-adds-517-000-new-jobs-in-january-in-sign-labor-market-still-strong-11675431419?mod=home-page   5 - https://www.marketwatch.com/story/u-s-home-prices-fall-for-5th-straight-month-in-november-case-shiller-index-shows-11675174667?mod=economy-politics   6 - https://www.marketwatch.com/story/u-s-construction-spending-falls-in-december-11675264823?mod=economic-report   7 - https://www.freddiemac.com/pmms   8 - https://www.cnbc.com/2023/02/02/mortgage-rates-five-percent-range-first-time-september.html   9 - https://therealdeal.com/texas/2023/01/30/elon-musk-lennar-plan-workforce-housing-near-boring-co/   10 - https://www.businessinsider.com/realtors-using-ai-chatgpt-to-write-property-listings-emails-2023-1