Walk It Back ??

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Good morning. In today’s edition:

• The stage is set for a rate cut
• New rules for real estate commission
• Single family rental inventory sees an uptick

?? WHAT'S STIRRING

August 5, 2024, 8:12 AM EST: The Japanese market Nikkei had its worst trading day since 1987, Warren Buffett slashes his Apple holding by half, Jeremy Siegel (Chief Economist, WisdomTree) calls for an emergency rate cut of 75 basis points, the VIX (volatility index) skyrockets, the Nasdaq opens down 6%... and if you look up you can see the sky actually falling towards you.

Remember that day? Me neither. Some are calling it a growth scare, I call it ancient history. A few days later Siegel said never mind, the market began eyeing a September rate cut, and optimism was restored. What we are watching closely now is the downward pressure on housing prices. Once the rate cuts begin, how quickly will homeowners and renters move? How much inventory will be freed up from the lock-in effect? Will we see a dramatic drop in list or rent prices?

• Inflation dropped below 3% to 2.9% in the July readings, setting the stage for an interest rate cut at the next Fed meeting in September. Some are saying these numbers are “good but still not great”, while others point out the potential risk to the labor market if no adjustment is made to the interest rate. This data comes on the heels of the market correction, or “growth scare”, on August 5th when the Dow dropped 2.6%. Markets have since rebounded and are anxiously awaiting the first rate cut since the Fed began their tightening cycle in March 2022, and meanwhile Jamie Dimon is still predicting a 65% chance of a recession.
• The new real estate commission rules go into effect, following the settlement from the National Association of Realtors in March 2024. What is different? Buyer’s agent commissions will no longer be advertised in MLS listings, sellers will no longer have to pay up front for both commissions, and buyers will negotiate directly with their agent on commission. Some are saying this will introduce a new era of competition, where buyers will shop around for buyer agents similar to how they would shop for a mortgage lender. The industry has maintained that commissions have always been negotiable, but the untold side of that is consumers are at a disadvantage given how infrequently they make a real estate transaction.
• Mike DelPrete invites real estate agents to “get boring”, in his latest keynote address at the Inman Conference in Las Vegas. He said despite all the news and noise about the industry changing or real estate agents being replaced with technology, so much of it has remained the same. Agent-assisted sales have been steady or even increased slightly over the past 40 years, home sales are low but they will still represent a $90B commission opportunity this year, and he cited a stat that 10% of agents switched their brokerage over the last year. He ended the presentation with his secret shop findings, emphasizing the need to do the boring and simple things well - like following up on leads and building a relationship with clients. He found a “consistently inconsistent” experience working with brokerages across the country and encouraged everyone to control what they can control and block out the noise.
• Renter household growth triples the rate for homeowner households, according to a new report from Redfin. The report found that renter households grew 1.9% year over year in the second quarter of 2024, up to 45.2 million, while homeowner households grew by only 0.6% to 86.3 million. This is likely a symptom of the current affordability issue in housing, as well as the significant increase in multi-family supply that we have seen over the last 2 years. Realtor.com published a recent report that also speaks to this trend, finding that renting a home is cheaper than buying a home in all 50 metros by an average of $1,067 per month. This tide could start to shift given the uptick in inventory, the slowdown in home sales, the downward pressure on home prices, and the (likely) decrease in interest rates.

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?? PLANOLABS INSIGHTS

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

Check out the video for a look at this month’s insights:

• Available single family rental inventory and days on market
• Small Business Optimism Index
• New construction for multi-family and single-family housing

For more PlanOlabs insights, click here.?

?? SFR IN THE NEWS

Everyone knows this stuff and you should too

• Rentvine raises $74M in growth capital
• EliseAI raises $75M in a Series D round, valuing the company at $1B
• NAR names new CEO
• Sibi and Carrier launch supply chain management system

?? Get $50 off your first order with code "BEAKER50" ??

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