Good morning. In today’s edition:
- NAR loses key members
- Vacancy days increase
- Existing home sales plummet
What a recent roller coaster for the hopeless romantics out there – Travis Kelce makes Taylor Swift a bracelet, the Golden Bachelor is down to three, AirBnb and New York City are not seeing eye-to-eye, NAR and 1.5 million realtors are exchanging awkward glances… who is for real and who is simply trying to make headlines? Can the Golden Bachelor find true love again? Can NAR??
The relationship I am watching closely is that between consumer sentiment and economic indicators. I know… juicy. Over and over I read from the sentiment side “All signs point to a recession”, but the economic indicators are still showing signs of strength.
This month felt different. The Consumer Sentiment Survey by the University of Michigan showed a 16% decrease in one-year expected business conditions. The Small Business Optimism Index showed small business owners expecting better business conditions over the next six months deteriorated by 6 points. I am reminded that most economic indicators are on a lag of 1-2 months, while a sentiment survey is a bit more real-time – an important distinction when everything seems so month-to-month nowadays. So, will this relationship get back in sync? Stay tuned.
- RE/MAX and Anywhere Real Estate announce they will no longer require agents to belong to the National Association of Realtors (NAR), while Keller Williams and HomeServices of America head to Federal Court alongside NAR. Meanwhile, Redfin went a step further and announced in an open letter that they will “require our brokers and agents to leave NAR everywhere we can.” There are quite a few threads to follow in this story that we can’t possibly cover here, but we can highlight a few interesting questions that have come from all this: 1) Why does the seller cover the buyer’s agent commission? 2) Is the buyer’s agent properly incentivized to negotiate a lower price? 3) Should NAR require a broker to pay a fee for every agent in the brokerage, even if the agent doesn’t want to be a member? It's safe to assume we will all be watching this one closely.
- Goldman Sachs predicts that mortgage rates will stay high through 2024, pushing existing home sales down to levels not seen since the 1990s. The well-documented lock-in effect will continue, which will keep housing turnover subdued and will shift the spotlight to new home sales. While homebuilding is usually sensitive to higher mortgage rates, things are a bit different now, given the low inventory of existing homes - housing starts were 5% higher in September than in 2019. Despite this recent shift, Goldman predicts a 4% decrease in starts next year, with Multi-Family starts expected to hit its lowest level since 2013.
- MBA, NAHB, and NAR send a letter to Fed Chair Jerome Powell asking him to provide market certainty on rate hikes. In the letter, the Mortgage Bankers Association (MBA) states that the current mortgage rates reaching a 23-year high have resulted in mortgage activity not seen since 1996. The letter requests that the Fed make two clear statements to the market: 1) “The Fed does not contemplate further rate hikes” and 2) “The Fed will not sell off any of its MBS holdings until and unless the housing finance market has stabilized and mortgage-to-Treasury spreads have normalized.” Meanwhile, Fed Chair Powell signaled a continued pause on rate hikes, stating, “It may just be that rates haven’t been high enough for long enough.”
- Nearly 9 out of 10 property management companies reported portfolio growth in the last two years, according to Buildium’s 2024 Industry Report – the highest number since the survey started eight years ago. Given the current challenge of buying existing homes, Property Managers must find new ways to grow their business, such as expanding to different property types, building their own properties, and acquiring other portfolios. Additionally, Accidental Landlords are on the rise again, up to 27% of rental owners in 2023 compared to 24% in 2022, and notably 69% of them hire a property management company, making them the most likely group of rental owners to do so.
- Nearly 2.5 million households moved into SFR homes over the last year, up 5.3% compared to 2022, according to a new analysis by the National Rental Home Council. The analysis also looked at the reasons households are moving - 13.2% moved for a new job or job transfer, which is up 3.4% from 2022. They also moved to find a better neighborhood (6.6%, +2.4% YoY) and cheaper housing (10.9%, +1.6% YoY), among other reasons. This trend is happening in tandem with the worsening gap between buying and renting affordability - it is now 52% more expensive to buy a home than rent one.
Proprietary insights into the SFR industry from our research and consulting team
Over the past few months, we have heard from our clients that leasing is becoming a challenge. We went to the data to quantify the challenge, and here is what we found:?
Between the months of August and October, we saw a 43% increase in single-family homes on the market for over 30 days compared with the previous 6 months. We break this number down by market and discuss creative solutions to marketing and leasing in our most recent PlanOlabs Insights blog post. ?
For more industry insights from PlanOlabs, visit our blog.
All the relevant data releases from the past month
- New Construction Starts are up 8.5% YoY for single-family homes, and down -31% YoY for Multi-Family buildings with 5+ units.??
- New home sales were up 16.6% MoM and up 33.9% YoY in September, reaching a 19-month high.
- Existing home sales declined 2% MoM in September and decreased 15.4% YoY, reaching its lowest level in 13 years.
For the rest of the housing and economic indicators we track, check out the full blog post here.
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