The Real Estate News Brief: Fed Minutes Reveal Rate Hike Clues, Homebuyer Competition Heats Up, Back-to-Office Migration Hits Plateau

In this Real Estate News Brief for the week ending July 8th, 2023... what’s on the minds of Fed officials, how homebuyer competition is impacting prices, and what isn’t happening with the back-to-office migration.    Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.   Economic News   We begin with economic news from this past week and the release of the minutes from the central bank’s last policy meeting. As you know, members of the Federal Open Market Committee voted unanimously in favor of a pause in rate hikes, but the minutes show that some members were in favor of another 25 point increase. The minutes also noted that the economy has been stronger than expected and that Fed officials don’t see a lot of “clear signs” that inflation is headed to their 2% target. (1) Fed Chief Jerome Powell has said that more rate hikes are likely. We’ll get two inflation reports in the coming week that will give us a better idea of what’s happening with inflation.   The job market also remains strong, although the latest reports show a slight weakening and some economists don’t think it’s enough to avoid another rate hike. The unemployment report was up 12,000 from the previous week to a two-year high of 248,000 initial claims. But the number of ongoing claims was down 13,000 to 1.72 million. It’s the third week in a row that they went down. As MarketWatch reports, the decrease in continuing claims is probably due to laid-off workers finding new jobs quickly, thanks to a strong job market. Although it’s great that people are employed, Fed officials feel that it also contributes to wage growth and inflation, which they are trying to control. (2)   The Labor Department also reported that job openings fell below the 10 million mark in May, which is another sign that the labor market is cooling slightly. (3) And companies only added 209,000 jobs in June. That’s the smallest number of new jobs since 2020, but the unemployment rate also fell from 3.7% to 3.6%. Average hourly pay is also up about 4.4% on an annual basis. (4) Most of the new jobs are for education, health, and the government, but construction jobs are also among the industries contributing to labor market growth.   Mortgage Rates   Mortgage rates are defying gravity and slowly creeping higher. Freddie Mac says the average 30-year fixed-rate mortgage is 6.81%, but Mortgage News Daily says it hit 7% this last week. Freddie’s chief economist Sam Khater blames the high rates on the strong economy, sticky inflation, the Fed’s rate hikes, and of course, a persistent low inventory of homes. (5) (6)   In other news making headlines…   Homes Selling Above Asking Price One Again   Homes are selling above their asking price for the first time in almost a year. Redfin says the average sale-to-list price ratio hit 100.1% for the four weeks that ended on July 2nd. The report says low inventory is the main reason for the higher sales price. (7)   Redfin says that new listings are down 25% from a year ago, and the total number of homes for sale is down 12%. There’s no lack of demand however. Redfin says that requests for home tours and other services are up 4% compared to a month earlier.   Agent Jeremy Lewis out of Portland, Oregon,  says: “Almost every home is getting multiple offers and selling over asking price. The lack of supply is making it feel almost like 2021 all over again.” Although he says the bidding wars are happening at a lower price point because buyers are getting squeezed by higher mortgage rates.   Return to the Office Hit a Plateau at 50%   Companies trying to get employees back in the office have hit a plateau. According to security company Kastle Systems, U.S. office workers are back in their offices about 50% of the time. The national average was actually a little less than that at 49.8% in late June. Kastle analyzes office usage in 10 U.S. metros. That’s up from about 40% last year but the number hasn’t changed much since the beginning of this year. (8)   Some companies are cracking down on employees to get them into the office. Citigroup is reportedly threatening employees with “consequences” if they don’t conform to the hybrid schedule. That’s usually three days a week. Google is also warning employees that office attendance will be part of their performance review.    Texas Lawmakers Approve Huge Cut in Property Taxes!   In breaking news out of Texas – State lawmakers are making it a whole lot more affordable to own property with the largest property tax cut in state history! It’s not quite a done deal yet, but the Texas House and Senate have agreed to an $18 billion dollar package to reduce property taxes. $12 billion will go toward a reduction in the school property tax for all homeowners and businesses. It also includes a $100,000 homestead exemption and a 20% limit on appraisal growth for non-homesteaded properties worth at least $5 million.   According to Houston Public Media, state lawmakers expect to pass the bill by the end of the week, and Governor Greg Abbott is looking forward to signing it when it reaches his desk.   The news is a big win for our North Dallas Rental Fund where we are buying single-family rentals for our fund investors. We’ll be going into more detail on the tax deal and the rental fund during a webinar on July 11th. If you miss it, you can always catch the replay at our website.   That’s it for today. Check the show notes for links at newsforinvestors.com. And hit the Join for Free button to become a RealWealth member. You’ll have access to lots of data on buying rental real estate for our financial freedom, including the webinar I just mentioned. And please remember to hit the subscribe button, and leave a review!   Thanks for listening. I'm Kathy Fettke.   Links:   1 - https://www.marketwatch.com/story/some-fed-officials-pushed-for-june-rate-hike-minutes-show-6007d897   2 - https://www.marketwatch.com/story/jobless-claims-climb-to-248-000-after-big-increases-in-michigan-and-new-york-97638580?mod=economy-politics   3 - https://www.marketwatch.com/story/job-openings-in-the-u-s-drop-to-9-8-million-labor-market-still-too-strong-for-the-fed-e064b516?mod=economy-politics   4 - https://www.marketwatch.com/story/jobs-report-shows-209-000-gain-in-june-smallest-increase-since-end-of-2020-fb8f7bd1?mod=economic-report   5 - https://www.freddiemac.com/pmms   6 - https://www.mortgagenewsdaily.com/markets/mortgage-rates-07072023   7 - https://www.nar.realtor/magazine/real-estate-news/mortgage-rates-hit-highest-average-so-far-this-year   8 - https://www.redfin.com/news/housing-market-update-homes-selling-above-asking-price/   9 - https://www.houstonpublicmedia.org/articles/news/politics/2023/07/10/456500/texas-house-senate-property-taxes-deal-18-billion-package/