Real Estate News: Real Estate Investing Podcast

The Real Estate News Brief: The Fed’s Latest Rate Hike, Two Inflation Reports, and a New Landlord Video Game

12.16.2022 - By Kathy Fettke / RealWealthPlay

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In this Real Estate News Brief updated to December 14, 2022… the Fed hikes short-term rates once again, two inflation reports show signs of improvement, and a video game called “The Tenants” showcases the job of a landlord.   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 economic news with another rate hike by the Fed as it tries to control inflation. Fed officials decided on a half point rate hike, as most economists expected. That’s lower than the last four three-quarter point rate hikes, and puts the Federal Funds rate between 4.25% and 4.5%. Fed officials also indicated that they would keep rates high throughout 2023, so any reduction in the overnight lending rate wouldn’t happen until 2024. (1)   Fed officials had just received the latest report on the consumer price growth the day before. The Labor Department reported that the Consumer Price Index or CPI was only up .1% in November to an annual rate of 7.1%. That’s down from an annual rate of 7.7% in October, and 9.1% in June. So it’s come down a full two points in four months. The core rate, which omits food and fuel, has also fallen from 6.3% to 6% over the last year.   A report on wholesale prices came out the week before showing a higher than expected monthly increase in the Producer Price Index or PPI. It was up .3% in November which puts the annual rate at 7.4%. Despite the monthly increase, the yearly rate has come down from a peak of 11.7% in March to 7.4% today. (3)   The job market is slowly cooling off in response to the Fed’s rate hikes. There were 4,000 more initial claims this last week for a total of 230,000 new claims. Last spring, initial claims were as low as 166,000 when the economy was still roaring back to life. The Fed’s rate hikes are forcing companies to trim their workforce a bit. There are now a total of 1.67 million people collecting benefits. (4)    The stock market’s response to economic conditions, including rate hikes, have resulted in a steep loss of individual net worth. The Federal Reserve reports that nominal net worth was down almost $7 trillion during the first three quarters of the year. It dropped 4.6% to a total of  $143.3 trillion. If you include the loss of purchasing power because of inflation, you get real net worth which has suffered about twice the loss. Total real net worth is about $13.5 trillion. (5)   Despite the resort on net worth, consumers are feeling a little less worried about inflation. The University of Michigan says its consumer sentiment index rose almost three points in December, to a reading of 59.1. Economists didn’t expect such a positive response. They think lower gas prices have helped make consumers feel more at ease about inflation. (6)   Mortgage Rates   Mortgage rates are down for a fourth week in a row. Freddie Mac says the average 30-year fixed-rate mortgage was down 16 points to 6.33%. The 15-year dropped 9 points to 5.67%. Rates breached the 7% mark in early November. The rapid decline since then is the fastest since 2008. (7) And some of our Real Wealth members are getting investor loans in the 5% range, because sellers have been willing to pay points to bring down the rate. With builder's discounting property and offering rates in the 5's, cash flow is back to 2019 levels on new homes. Find out at RealWealth.com.    In other news making headlines...   Big Decline in Listing Volume   More and more home sellers are sitting on the sidelines. According to House Canary, the volume of new listings has declined for seven months in a row, and is now down 25.1% year-over-year. Listing removals have climbed even higher, to 64.3% compared with November of last year.    Many buyers and sellers have put their plans on hold because of high interest rates, and other economic factors. Economists expect to see more of the same as we head into the new year.   Top State for Homebuyers   Millennials who aren’t postponing their homebuying plans are ditching New York, Los Angeles and Chicago for other hot metros in Texas and Florida. A new study by SmartAsset shows four of the top ten millennial destinations are in Texas and Florida. Austin moved up from fourth place last year to the top spot this year. Denver is second on the list followed by Dallas. Raleigh, North Carolina is fourth, and Jacksonville, Florida is fifth. The other top five cities are Henderson, Nevada; Salt Lake City; Virginia Beach; Tampa; and Nashville. (8)   The cities that are seeing the biggest outflow of millennials are New York, Chicago, Washington, D.C., Boston, and Los Angeles. San Francisco is also among those losing a lot of millennials.    A study by Redfin on cities getting the highest number of searches also includes Tampa and Dallas, but Sacramento, California was at the top of that list. Several other Florida cities are also on the Redfin list including Orlando, Miami, Cape Coral, and North Port-Sarasota. (9)   “The Tenants” Video Game   A new video game could teach players to be a little more understanding about the job of a landlord. The game is called “The Tenants” with the players taking on the role of the landlords. I haven’t tried it yet, but Bisnow says the game “carries the potential to add a little nuance to the public perception of the business – and asks the question, can this often-maligned profession get a little love?” (10)   Players are faced with making choices that have consequences for their rental business and the well-being of their tenants. If they blow off a tenant request to save money, the tenant might revolt in some way. If a tenant causes a problem, they will have to decide how to respond. The co-creators say it’s great for property management training, because the players deal with all aspects of the business, including renovations, maintenance, bill-paying, and emergencies that need to be taken care of in the middle of the night.   You’ll find the game on the Steam platform.   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 to find out how to become a real-life landlord! It’s free to join and free to access our data on hot rental markets. You also get access to our experienced investment counselors and other real estate professionals that can help you reach your real estate goals.   Thanks for listening. I'm Kathy Fettke.   Links:   1 - https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html   2 - https://www.marketwatch.com/story/coming-up-cpi-inflation-report-11670937380?mod=mw_latestnews   3 - https://www.marketwatch.com/story/coming-up-producer-inflation-for-november-11670590979?mod=economic-report   4 - https://www.marketwatch.com/story/u-s-jobless-claims-climb-to-230-000-in-sign-labor-market-is-slowly-cooling-off-11670506623   5 - https://www.marketwatch.com/story/household-wealth-down-by-13-5-trillion-in-2022-second-worst-destruction-on-record-11670623787?mod=rex-nutting   6 - https://www.marketwatch.com/story/consumer-sentiment-improves-in-december-as-inflation-worries-ease-11670598779?mod=economic-report   7 - https://www.freddiemac.com/pmms   8 - https://smartasset.com/data-studies/where-millennials-are-moving-2022   9 - https://www.cnbc.com/2022/12/10/nearly-25percent-of-us-homebuyers-want-to-relocate-to-a-new-city.html   10 - https://www.bisnow.com/national/news/commercial-real-estate/meet-the-tenants-the-game-that-could-change-perceptions-about-landlords-116394

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