In this Real Estate News Brief for the week ending August 8th, 2020… some positive news about mortgage rates, a new disclosure rule for landlords, and where people “hide out” at home.
We begin with economic news from this past week that is highlighted by negotiations in Congress for a new economic stimulus package. At the time this podcast was written, the two sides were at an impasse, the $600-a-week unemployment bonus had expired, and eviction moratoriums were ending.
The weekly unemployment report did offer some positive news. (1) The Labor Department reported just 1.19 million new claims. That represents 250,000 fewer claims than the previous week, and the biggest one-week decline since the pandemic began.
Economists say the drop may be partially due to the expiration of that $600 bonus because some people may have thought they are no longer eligible for benefits. The total number of people receiving traditional jobless benefits is now 16.1 million, but if you factor in other state and federal assistance programs, a total of 31.3 million people are receiving benefits.
The government also reported the creation of 1.75 million new jobs in July. That’s a big drop from the June numbers but the official unemployment rate did fall for a third month in a row. It’s now at 10.2%. That’s the so-called U3 rate of unemployment. If you look at the U6 rate which includes workers who can only find part-time work and others who’ve been discouraged and stopped looking for a job, the rate is more like 16.5%.
Construction spending was down for a fourth month in a row in June. The Commerce Department says, it fell a seasonally-adjusted annual rate of .07%. That’s less of a drop than some economists expected. Spending on residential construction was down 1.5% while spending on public construction was down .7%.
Consumer spending was up in June. The government says, it rose 5.6% as people emerged from their homes and shopped for new cars, bought clothes and spent more money on gas and recreation. There was also an increase in medical spending for treatments that were not related to the virus.
Mortgage rates are sinking even lower. Freddie Mac says that average 30-year fixed-rate mortgage was down 11 basis points to 2.88% last week. The average 15-year was down 7 points to 2.44%. Those low rates are motivating buyers while a lack of inventory is holding many of them back.
In other news making headlines…
Low, Low Mortgage Rates
The search for a great low rate may produce even better results than the Freddie Mac average. United Wholesale Mortgage out of Pontiac, Michigan is offering rates as low as 2.5% for a 30-year and 1.875% for a 15-year through its Conquest program. You have to get this loan through a broker, who is approved to work with UWM. (2)
These are conforming loans for a primary residence or a second home. They cannot be used for government-backed loans, non-conforming investor loans, or for cash-out refinancing. CEO Mat Ishbia says, the program is designed to get a larger chunk of the residential loan market as it competes with the nation’s biggest lender, Quicken Loans.
Year-Over-Year Rent Growth
Year-over-year rent growth has turned negative for the first time since 2010. Yardi Matrix says, national multi-family rents were down $2 a month in June, to an average of $1,457. (4) They’ve been slowly dipping since the beginning of the year with a $12 a month total drop since January.
Rent growth has been running in the opposite direction for single-family homes. CoreLogic said in June, that SFR rents have slowed down a bit but were up 2.4% year-over-year in April. Rents have been growing the fastest for lower-priced homes. St. Louis was the only metro to show a slight decline in April.
Forbearance Disclosure Rule for Landlords
Federal housing officials have announced a new disclosure rule for landlords. The FHFA says, multifamily owners with government-backed loans in forbearance must tell their tenants that the terms of the program protect tenants from eviction.
Even though eviction moratoriums are being lifted, tenants are still protected under this kind of forbearance program. The only difference now, is that landlords must make sure that tenants know this.
FHFA Director Mark Calabria said in a statement, “Landlords in forbearance must notify their tenants that they cannot be evicted for nonpayment of rent due to the pandemic.” He also added, “If tenants are able to pay their rent, they should continue to do so.”
Favorite Room in the House
Many people have changed their opinion about their favorite place to hang-out at home. The room that has topped the list in previous surveys by Ally Home shows that the family room is the favorite. But now, with families spending so much time at home together, 27% of survey participants say they prefer the master bedroom while 14% say the family room. The kitchen comes next followed by the master bath and the man or woman cave. Many respondents say the master bedroom became the new favorite because it’s a place where they can hide from other family members.
(2) Mortgage Rates: MarketWatch
(3) Single-Family Rents: CoreLogic