Since many on this site may be buying or selling a home at any given time, own investment properties, or commercial real estate I'm posting this weekly update to stay current.
The data is well researched from various reliable sources and is a weekly accumulation of different data that can drive the real estate market up & down.
Thus, it is fact based and only analyzing the data/trends without regard to political bias.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
One item that's not looking goof for housing is the huge drop in the futures market for the price lumber. Since lumber is a core staple of construction it has historically been a great indicator of the housing market - it is a pure-classical "Supply vs Demand" indicator. This 80% drop in the last24 months is troubling.
And we are also seeing it in the housing construction data as seen here.
This decline is showing up in places like Home Depot. "During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects," Decker said. The company now forecasts 2024 sales at its locations open at least a year to fall between 3% and 4%. Its prior outlook called for a drop of roughly 1%.
MoneyWatch Home Depot Warns of Pullback in Consumer Spending, Saying Americans Are Delaying Big Projects
Of course when housing slows down it has a negative multiplier effect in the economy. For example, the appliance company Conns closed all of its stores declaring bankruptcy.
https://www.kplctv.com/2024/08/07/conns-homeplus-closing-all-stores-after-filing-bankruptcy/
Conn's also owned Badcock Furniture, which had been around for 120 years and they have shuttered all stores.
Badcock Closes 380 Stores in 8 States
"Personal Thought" how did a company with a name like, "Badcock" make it 120 years?
Events like these are leading to a much anticipated rate cut by the Federal Reserve.
News from Powell on a projected Rate Cut - the question is how much and how often - lots of opinions abound on this topic.
However, the latest CPI report came and went with little market reaction as July's data output met expectations, showing inflation falling to 2.9%, marking the first time inflation has slipped below the 3% mark since March 2021. That gave market participants relief and should be taken as confirmation that rate cuts are on the way.
If there were one disappointing aspect of the report, it would be shelter costs, which continue to be stubbornly sticky. In July, shelter inflation remained elevated at 5.0% annually while accounting for 90% of the 0.4% month-over-month increase in July, and higher than the 0.2% rise in June. Although shelter inflation is widely cited for its lagging flaws, it will none the less continue to be a thorn in the overall inflation narrative that the Fed will need to battle. For how long? Some economists suggest that housing's contribution to inflation could remain elevated for the rest of 2024 and into 2025. A 15-month lag in the Case-Shiller Home Price Index suggests a rebound in Owner's Equivalent rent is possible since bottoming.
Yet, the Fed should read through these lagging effects as other current market rent indicators suggest, concluding that growth has stabilized and the inflation genie is back in the bottle. After all, CPI less shelter has been around the Fed's target for some time now and currently sits at 1.8%. Going forward, all rate decisions will likely hinge on the jobs market.
The question is what does this mean for buyers and sellers?
Sellers should continue to experience a rise in appreciation though not at the levels of the last few years. With lower rates it means more buyers for those that may want to move themselves, especially those with rates in the 3's - a year ago when rates were right at 8% no one would give up their 3% rate - the story changes for some if conventional rates get into the 5's - FHA and VA are already there and 15 Year Conventional is close to breaking into high 4's.
Buyers - more people should come off the fence with lower rates. Though as mentioned above the homes available may be priced higher and sell faster with increased demand.
Here is the culprit that both sides of the aisle have to work to solve - housing affordability is at a record low.
The problem is that lower rates lead to higher home prices, yet for the majority of Americans there rate of pay in not increasing enough to afford homes at these prices. Yes we are undersupplied on homes - unless you go further out it is hard to build homes that people want at an affordable price.
What's the answer?
Go back to building Duplexes and Quadplexes in high density areas. Could some companies relocate to places that have more homes and lower prices - thus putting more money in their employees pockets, while increasing the tax base and improving local schools?
Something is going to have to change as the current trend is not sustainable for a healthy housing industry and country.
In Other Real Estate News -
Some realtors who felt their Association, NAR, did not represent them well, have now filed suit against the organization. Here is their contention:
Brokers File Suit Against NAR
In the suit, the plaintiffs allege that the “compulsory membership in these associations” is a violation of antitrust laws, as well as an example of “economic coercion, unfair restraint on trade and conspiracy.”
The plaintiffs’ complaint says that these claims are predicated in part on NAR’s nationwide commission lawsuit settlement agreement, which bans offers of buyer broker compensation from the MLS, which the plaintiffs claim “essentially invites brokers and agents to participate in deceptive compensation practices,” and “encourage discrimination among sellers and sellers’ agents, which will negatively affect consumers, agents and brokers.”
According to the complaint, the plaintiffs believe the “wrongful acts of the defendants” have caused them to lose earning potential, and have been an overall detriment to their business. Additionally, they claim that the “compulsory nature of membership in the defendants’ organizations in order to access the MLS is a violation of their ability to conduct business in a fair and unencumbered manned which has resulted and will continue to result in them incurring damages.”
Will this be the end to the NAR and their local organizational grip on the MLS Service?
My thoughts are that the MLS is where everyone gets their listing information including Trulia, Zillow, and others. Someone has to own the MLS, it has to be paid for, and it makes sense that those that need it to do their work i.e., realtors, appraisers, and aggregators pay for it.
MLS is a great thing both for industry professionals and the general public. Can you imagine if you had to go to every real estate company's website to see their listings versus a central portal like MLS. The amount of time that would take the typical buyer would be ridiculous.
Big Change In How You Buy Residential Real Estate Now In Effect -
As mentioned in another thread https://texas.forums.rivals.com/thr...ountry-is-about-to-change-drastically.638556/- starting this week as of August 17th if you are buying a home be prepared to sign a Buyer's representation agreement where you and a realtor agree on the commission you will be paying them if you buy a home where the seller is not compensating the Buyer's Agent.
My thoughts -
On the positive side I think that buyer's will get better representation and gravitate to the agents that can demonstrate their skills and experience upfront with the buyer. There will be a "Weeding-Out Process" of the "Part-Time" agent - a win-win for the industry and public.
On the negative side it's possible that there will be more agents that "steer" their clients to homes paying the highest commission. In addition, some buyers cannot afford to pay their agent a commission.
Working with a lender that can think outside the box to use premium pricing or seller concessions to save money on other closing costs that savings can be used to pay the Buyer's agent commission is important.
Final Thoughts -
Since an October high last year when rates were right at 8.00% we've already had about a +/- 1.750% decrease in rates from that high. Thus, for those that bought a home almost a year ago you may want to look at refinancing options.
Football in 4 Days!
Always happy to answer questions to help you and those you care about!
Have an amazing week!
MH
The data is well researched from various reliable sources and is a weekly accumulation of different data that can drive the real estate market up & down.
Thus, it is fact based and only analyzing the data/trends without regard to political bias.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
One item that's not looking goof for housing is the huge drop in the futures market for the price lumber. Since lumber is a core staple of construction it has historically been a great indicator of the housing market - it is a pure-classical "Supply vs Demand" indicator. This 80% drop in the last24 months is troubling.
And we are also seeing it in the housing construction data as seen here.
This decline is showing up in places like Home Depot. "During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects," Decker said. The company now forecasts 2024 sales at its locations open at least a year to fall between 3% and 4%. Its prior outlook called for a drop of roughly 1%.
MoneyWatch Home Depot Warns of Pullback in Consumer Spending, Saying Americans Are Delaying Big Projects
Of course when housing slows down it has a negative multiplier effect in the economy. For example, the appliance company Conns closed all of its stores declaring bankruptcy.
https://www.kplctv.com/2024/08/07/conns-homeplus-closing-all-stores-after-filing-bankruptcy/
Conn's also owned Badcock Furniture, which had been around for 120 years and they have shuttered all stores.
Badcock Closes 380 Stores in 8 States
"Personal Thought" how did a company with a name like, "Badcock" make it 120 years?
Events like these are leading to a much anticipated rate cut by the Federal Reserve.
News from Powell on a projected Rate Cut - the question is how much and how often - lots of opinions abound on this topic.
Latest CPI Report Provides Green Light for Rate Cuts
After such a wicked move in financial markets last week following legitimate concerns from several indicators that suggest a slowing U.S. economy ahead and the Bank of Japan raising rates to their highest level since 2008 as they moved their target rate from 0.1% to 0.25%, causing investors to unwind positions denominated in yen, one could only watch with bated breath as the latest CPI results were published wondering if more volatility would hit the tape.However, the latest CPI report came and went with little market reaction as July's data output met expectations, showing inflation falling to 2.9%, marking the first time inflation has slipped below the 3% mark since March 2021. That gave market participants relief and should be taken as confirmation that rate cuts are on the way.
If there were one disappointing aspect of the report, it would be shelter costs, which continue to be stubbornly sticky. In July, shelter inflation remained elevated at 5.0% annually while accounting for 90% of the 0.4% month-over-month increase in July, and higher than the 0.2% rise in June. Although shelter inflation is widely cited for its lagging flaws, it will none the less continue to be a thorn in the overall inflation narrative that the Fed will need to battle. For how long? Some economists suggest that housing's contribution to inflation could remain elevated for the rest of 2024 and into 2025. A 15-month lag in the Case-Shiller Home Price Index suggests a rebound in Owner's Equivalent rent is possible since bottoming.
Yet, the Fed should read through these lagging effects as other current market rent indicators suggest, concluding that growth has stabilized and the inflation genie is back in the bottle. After all, CPI less shelter has been around the Fed's target for some time now and currently sits at 1.8%. Going forward, all rate decisions will likely hinge on the jobs market.
The question is what does this mean for buyers and sellers?
Sellers should continue to experience a rise in appreciation though not at the levels of the last few years. With lower rates it means more buyers for those that may want to move themselves, especially those with rates in the 3's - a year ago when rates were right at 8% no one would give up their 3% rate - the story changes for some if conventional rates get into the 5's - FHA and VA are already there and 15 Year Conventional is close to breaking into high 4's.
Buyers - more people should come off the fence with lower rates. Though as mentioned above the homes available may be priced higher and sell faster with increased demand.
Here is the culprit that both sides of the aisle have to work to solve - housing affordability is at a record low.
The problem is that lower rates lead to higher home prices, yet for the majority of Americans there rate of pay in not increasing enough to afford homes at these prices. Yes we are undersupplied on homes - unless you go further out it is hard to build homes that people want at an affordable price.
What's the answer?
Go back to building Duplexes and Quadplexes in high density areas. Could some companies relocate to places that have more homes and lower prices - thus putting more money in their employees pockets, while increasing the tax base and improving local schools?
Something is going to have to change as the current trend is not sustainable for a healthy housing industry and country.
In Other Real Estate News -
Some realtors who felt their Association, NAR, did not represent them well, have now filed suit against the organization. Here is their contention:
Brokers File Suit Against NAR
In the suit, the plaintiffs allege that the “compulsory membership in these associations” is a violation of antitrust laws, as well as an example of “economic coercion, unfair restraint on trade and conspiracy.”
The plaintiffs’ complaint says that these claims are predicated in part on NAR’s nationwide commission lawsuit settlement agreement, which bans offers of buyer broker compensation from the MLS, which the plaintiffs claim “essentially invites brokers and agents to participate in deceptive compensation practices,” and “encourage discrimination among sellers and sellers’ agents, which will negatively affect consumers, agents and brokers.”
According to the complaint, the plaintiffs believe the “wrongful acts of the defendants” have caused them to lose earning potential, and have been an overall detriment to their business. Additionally, they claim that the “compulsory nature of membership in the defendants’ organizations in order to access the MLS is a violation of their ability to conduct business in a fair and unencumbered manned which has resulted and will continue to result in them incurring damages.”
Will this be the end to the NAR and their local organizational grip on the MLS Service?
My thoughts are that the MLS is where everyone gets their listing information including Trulia, Zillow, and others. Someone has to own the MLS, it has to be paid for, and it makes sense that those that need it to do their work i.e., realtors, appraisers, and aggregators pay for it.
MLS is a great thing both for industry professionals and the general public. Can you imagine if you had to go to every real estate company's website to see their listings versus a central portal like MLS. The amount of time that would take the typical buyer would be ridiculous.
Big Change In How You Buy Residential Real Estate Now In Effect -
As mentioned in another thread https://texas.forums.rivals.com/thr...ountry-is-about-to-change-drastically.638556/- starting this week as of August 17th if you are buying a home be prepared to sign a Buyer's representation agreement where you and a realtor agree on the commission you will be paying them if you buy a home where the seller is not compensating the Buyer's Agent.
My thoughts -
On the positive side I think that buyer's will get better representation and gravitate to the agents that can demonstrate their skills and experience upfront with the buyer. There will be a "Weeding-Out Process" of the "Part-Time" agent - a win-win for the industry and public.
On the negative side it's possible that there will be more agents that "steer" their clients to homes paying the highest commission. In addition, some buyers cannot afford to pay their agent a commission.
Working with a lender that can think outside the box to use premium pricing or seller concessions to save money on other closing costs that savings can be used to pay the Buyer's agent commission is important.
Final Thoughts -
Since an October high last year when rates were right at 8.00% we've already had about a +/- 1.750% decrease in rates from that high. Thus, for those that bought a home almost a year ago you may want to look at refinancing options.
Football in 4 Days!
Always happy to answer questions to help you and those you care about!
Have an amazing week!
MH
Last edited:
