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SHOCKER: Rent Control Doesn’t Work

Andreas Kluth has a great piece over at Bloomberg that looks at the latest data from Berlin after the city tried a rent control program over a year ago.

So what did they do?  Kluth explains, “For all apartments built before 2014, rents were frozen at whatever they were on Jun. 18, 2019.”

What happened?  In the regulated markets prices dropped relative to those in the 13 other cities.  Meanwhile in the unregulated markets, apartments outpaced those in the other cities.

Kluth’s conclusion nails it on the head, “These data confirm what economists had warned about — and what’s been observed in other cities that dabbled in rent controls, such as San Francisco or Cambridge, Massachusetts. The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market.”

Read the full piece and see all the charts @ Bloomberg.com

March 2, 2021, 6:29 pmby Tyler Cralle
The Blog

Disruptions Make Buying More Affordable

Contrary to popular belief, housing prices aren’t skyrocketing everywhere.  In fact, Bloomberg reported that Manhattan’s priciest apartment contracts last week had one thing in common: The sellers lost money.

New data from Realtor.com found that buying a home is becoming more affordable in the 50 largest metro areas (Realtor.com)

– The monthly cost to buy is up only 0.2% from the same time last year when it was $1,983. Meanwhile, the cost to rent increased by 2.4% year-over-year, from $1,696 to $1,727.

– The monthly cost of buying a home is the same or more affordable than renting in 15 of the 50 largest metros.  This is up from 13 markets a year ago.

The COVID pandemic has been quite devastating for most large cities in this country real estate included.  However, with vaccines up and cases down, there are signs things could be turning around in the big cities.  A few weeks ago the New York Post reported that “the first signs the city is making a comeback have appeared, with Manhattan and Brooklyn lease signings seeing the highest surge in the past 13 years.”

I’m not sure how long it will take for people to flock back to the big cities, but until then it does seem like there are some buying opportunities.  For a full list of the top rental and buying market head over to Realtor.com

 

March 2, 2021, 2:49 pmby Tyler Cralle
The Blog

Home Prices Jump 10%

The latest CoreLogic Home Price Insights report finds that homes are appreciating at the fastest pace in over 7 years (CoreLogic)

– Y-O-Y: Home prices nationwide increased 10% in January 2021 compared with January 2020

– M-O-M: Home prices increased 0.9% in January 2021 compared with December 2020

This was the first double-digit annual appreciation CoreLogic has recorded since November 2013

The low-rate environment had a big impact on prices.  Frank Martell, President and CEO of CoreLogic, said in a statement, “Record-low mortgage rates were a significant driving force behind last year’s rebound in housing market activity. However, heavy competition for the few houses on the market drove home prices to historic highs, and mortgage rates are no longer enough to sway the affordability challenges for consumers.

So what does the future hold?  A survey from CoreLogic found that nearly 76% of U.S. non-homeowners have no plans to purchase a home within the next six months.  A plurality of respondent s(43%) said affordability constraints are the number one reason why they won’t be buying.  This is why CoreLogic forecasts a slowdown for the year ahead

  • The CoreLogic HPI Forecast predicts 3.3% growth from January 2021 to January 2022.
March 2, 2021, 10:15 amby Tyler Cralle
The Blog

Mortgage Loans in Forbearance Increase Slightly

The latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased by 1 basis point to 5.23% as of February 21, 2021. (MBA)

– INITIAL STAGE: 15.6% of total loans in forbearance are in the initial forbearance plan stage.

– LATE STAGE: 81.9% are in a forbearance extension.

Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement, “A small increase in new forbearance requests, coupled with exits decreasing to match a survey low, led to the overall share of loans in forbearance increasing for the first time in five weeks.”

March 1, 2021, 6:30 pmby Tyler Cralle
The Blog

New Study: Housing Affordability

A new study by the National Association of Home Builders highlights the nation’s housing affordability crisis (NAHB)

– It’s already a problem for 75.1 million households, or roughly 60% of all U.S households, who are currently unable to afford a new median-priced home.

– Even a small increase can price a lot of families out of the market. The study found that a $1,000 increase in the U.S. median new home price of $346,757 would push 153,967 households out of the market.

Lumber prices alone, which are up 180% in the past 10 months, have pushed 3.7 million households out of the housing market.

THE BIG THREE: Texas had the largest number of home buyers that would be priced of the market followed by California (12,361) and Florida (10,215).

NAHB Chairman Chuck Fowke said in a statement, “While builders across the nation are reporting solid demand for new homes fueled by low-interest rates, favorable demographics and a suburban shift to more affordable markets as a result of the COVID-19 crisis, many prospective buyers are hitting a brick wall due to a run-up in pricing in recent years,”

March 1, 2021, 1:35 pmby Tyler Cralle
The Blog

Manufacturing Continues To Grow

The February Manufacturing PMI registered 60.8%, an increase of 2.1%  from the January reading of 58.7%. (ISM)

– The New Orders Index jumped 3.7% to 64.8%

– The Production Index was up 2.5% to 63.2%

– The Employment Index was up 1.8% to 54.4%

Unfortunately, it wasn’t all good news.  Disruptions to the supply chain are still causing problems.  This is evident by the increase in backlogs and prices

– The Backlog of Orders Index jumped 4.3% to register at 64%.  This is the highest level since April 2004.

– The Prices Index jumped 3.9% to register at 86%.  This is the highest since July 2008.

 Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee, said in a statement, “Manufacturing performed well for the ninth straight month, with demand, consumption and inputs registering strong growth compared to January. Labor-market difficulties at panelists’ companies and their suppliers continued to restrict manufacturing-economy expansion and will remain the primary headwind to production growth until employment levels and factory operations can return to normal across the entire supply chain,”

 

March 1, 2021, 11:21 amby Tyler Cralle
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