That's a Wrap? ??

Good morning. In today’s edition:

• Interest rate hikes might be finished
• A deep dive into “Supply” data
• Real estate agents are on the move

?? What's Stirring

700 of 770 OpenAI employees signed a letter asking the board to reinstate Sam Altman as CEO - that’s an impressive ratio of support. I won’t pretend to know what all went on here (safe to assume that money had something to do with it?), but it appears the letter worked. He was reinstated within four days!?

Now with that saga behind us, it made me think about some of the other things reaching their conclusion… Hollywood is back to work, the lawsuit against NAR ruled in favor of the plaintiff, WeWork filed for bankruptcy, SBF was found very very guilty, and maybe, just maybe, the Fed is done raising the interest rate… which would mean now it is time to bundle up and prepare for the freeze. And yes, the next question will be: When will the interest rate freeze conclude?

• The yield for the 10-year Treasury saw its largest single-day decline since Silicon Valley Bank failed in March, after inflation numbers continued to cool according to the latest Consumer Price Index Report. Core inflation for the five months ended in October was at an annual rate of 2.8%, down from 5.1% during the first five months of the year. Stocks and bond prices rallied when the report came out, with investors hoping this signaled the end of interest rate hikes from the Fed (they are expected to keep interest rates where they are at their next meeting on December 12-13). “The hard part of the inflation fight now looks over,” said David Mericle, chief U.S. economist at Goldman Sachs. Interestingly, in the latest Consumer Sentiment Survey from the University of Michigan the year-ahead inflation expectations actually increased from 4.2% to 4.5%... something to keep an eye on.
• Despite some economic indicators recovering like increasing GDP and easing inflation, the number of consumers who say it is a good time to buy a house is at its lowest since 1982. Gasoline and groceries often get a lot of attention in the inflation report - with good reason as they are both up 43% and 20%, respectively, since January 2021 - but shelter costs affect consumers in a different way. Consumers might be able to change a few habits to reduce gas or grocery bills, but housing expenses are much more fixed. “The buyer of the typical home thus faces a monthly principal and interest payment of nearly $2,200, more than double the level of early 2021”, the National Association of Realtors calculates. Figures like this underscore why Consumer Sentiment remains so low. According to John Burns, rebalancing the affordability of housing will take years, and prices next year will likely flatten but not fall.
• “Out of all segments, I think that Class A multifamily marketers in big cities face the most cause for concern,” said Jeff Tucker, Zillow Senior Economist in Zillow’s 2024 Consumer Housing Trends Report. He cited the reduced demand for urban density and job proximity due to hybrid work, and the pending increase in Multi-Family supply that continues to hit the market. Also in the report, the number of renters that use either a mobile website or a mobile app in their search has increased 9 and 12 percentage points, respectively, since 2020, and the typical renter went on only one in-person tour. Finally, renters are placing much more importance on the value of shared amenities compared to recent years - the share of renters that consider a fitness center or a shared recreation space ‘Very or Extremely important’ are both up 9% YoY. Why? Possibly because renters want more value from their higher rent prices, and as we come out of isolation renters may be seeking a sense of community.
• Since the beginning of the year, 10,500 real estate agents have left the big legacy brands, while the exact same number of agents have joined the low-fee brokerages, according to Mike DelPrete’s recent report. This is at least the third straight quarter of declining agent counts at the large legacy brands: Anywhere, RE/MAX, and Keller Williams, and the trend speaks to an important shift in the industry to lower-cost, cloud-based brokerages that don’t carry the overhead of office space. This data is coming on the heels of this month’s verdict that found HomeServices of America and Keller Williams liable for $1.8 billion in damages, which may mark the beginning of a new era of how homes are bought and sold by decoupling buyer and seller agent commissions.
• Average days on market for rental properties increased 28% year-over-year and available-for-rent inventory increased 31%, according to the latest House Canary Single Family Rental Report. Median rent prices on the other hand experienced only a marginal increase of 0.7% compared with Q3 2022. Notable markets that have seen the largest increase in days on market are Raleigh (+281% to 61 days), Atlanta (+171% to 46 days), and a number of markets in Florida seeing a two-fold increase. Markets that have maintained lower days on market this year are Huntsville (19 days), Pittsburgh (29 days), St Louis (24 days), and a few markets in the northeast.?

?? PlanOlabs Insights

Proprietary insights into the SFR industry from our research and consulting team

When the housing affordability issue comes up, we always hear the same answer: “Supply”. This month the PlanOlabs team dove into New Construction data, looking at permits, starts, and completions for both single-family and multi-family dating back to the early 1970’s. We found that multi-family permits have exploded in the last decade (up over 400% from 2009 to 2022), and growth for single-family permits is rising at a comparable rate to the run-up to 2005.

We put 10 charts together to tell the story. Check out the full blog post here.

For more industry insights from PlanOlabs, visit our blog.

?? I Like Big Data (Releases) and I Cannot Lie

All the relevant data releases from the past month

• The Consumer Price Index excluding Food & Energy increased 4% over the last 12 months, after increasing 4.1% in the 12 months ending in September.
• Building permits for single-family homes increased for the 11th consecutive month, reaching a level not seen since May 2022.
• Year-ahead inflation expectations rose to 4.5% this month, up from 4.2% in October, reaching its highest reading since April 2023 according to the Consumer Sentiment Survey from the University of Michigan.For the rest of the housing and economic indicators we track, check out the full blog post here.

?? SFR in the News

Everyone knows this stuff and you should too

• Bob Goldberg steps down as NAR CEO
• HomeRiver Group is named the preferred property manager for exp Realty
• WeWork files for bankruptcy
• Vinebrook unveils “Pathway to Home Ownership” initiative
• Zillow acquires Follow Up Boss

PlanOmatic?provides quality photos, floor plans, and 3D to the single-family rental industry with speed and at scale, nationwide.