March 20, 2019 – REsimpli’s Real Estate News and Market Update
January Sales Slowed but Rates Dropped Significantly
According to CoreLogic home prices rose at the slowest pace in 7 years with a 4.4 percent year over year increase. Price gains had peaked last April of 2018 at a 6.6% year over year gain. However, interest rates have dropped steeply by 0.6% from November 2018 which means that fixed-mortgage rates are lower than they were a year ago while housing supply is still low. This is important because it sits at 4.5% which was around a year ago when prices were increasing by 6%. Overall the data suggests that prices may edge up while buying activity continues to dry. However, with the change in interest rates and spring coming, buying tends to pick up slightly due to seasonality.
Construction Spending in December Down
Another sign of the slowdown being here is that construction spending fell by 0.6% which is a significant change from the 0.8 percent increase in November according to the Commence Department. This is so significant that it can impact the Q4 2018 Gross Domestic Product calculations. Construction spending is a vital sign of what is going on with future investment and when it unexpectedly declines, it shows low confidence in the business environment and real estate as a whole.
Data from Realtor.com Shows a Tricky Spring
Median home price listed in February increased 7 percent to a median price of $294,800 with the number of listings increasing by 6 percent to a total of 73,000 compared with a year ago. This is the fifth consecutive month of inventory increasing, and inventory has increased even more in large markets. Inventory increasing while prices increase is a sign that buyers are having a hard time buying due to affordability from the increase in prices over the last several years. Signed contracts increase 4.6 percent from December to January and this coincides with the large drop in interest rates. Gains were strongest in areas of the country where home prices were lower. Volume decreased nationally despite the interest rate drop.
Federal Reserve Key Information:
The Federal Reserve policy affects all asset prices – from housing to stocks. Thus knowing the outlook gives investors insight and better predictability of the future.
Interest Rate: On January 30, 2019 the Federal Reserve said that it would keep its target range for its benchmark interest rate at 2.25% to 2.5%
Federal Reserve Outlook: Currently there are two camps in the Fed. One camp that wants to further raise rates and another that wants to stop. The camp that wants to stop is currently winning.
Other Key Data:
Data is backward looking and takes time to compile. That’s why the January data just came out for home sales even though it’s March. Home sales data from the National Association of Realtors:
Unemployment Rate: 4% through January 2019
REsimpli is founded by Sharad Mehta, a very active real estate investor. Sharad has done over 400 deals in last 6 years since he became a full-time real estate investor and over the years he has developed systems to automate many parts of his real estate investing. Sharad is a very active investor i See more >>
REsimpli is founded by Sharad Mehta, a very active real estate investor. Sharad has done over 400 deals in last 6 years since he became a full-time real estate investor and over the years he has developed systems to automate many parts of his real estate investing. Sharad is a very active investor in Lake County, Indiana market and he manages his entire business from Carlsbad, California, where he lives. Using the systems that Sharad has developed, he is able to manage 3-4 rehabs a month from a distance.
At reSimpli, our mission is to ‘Simplify Real Estate Investing Through Technology.’ Our team is passionate about using technology to reduce the time and energy required to build and manage a successful real estate business. reSimpli is a cloud-based system that makes real estate investing more efficient by automating tasks and helping the investor manage their business more efficiently.
We are constantly building and improving features that aid in: creating accurate and detailed scope of work for rehab projects, creating contracts with digital signature support, deal analysis tools, etc. We are a team of very active real estate investors so everything we are developing is something we find useful in our day to day investing.
Our passion is to create the best software for your real estate investing business and aim to be the only software program that a real estate investor needs to run a successful, scalable business. See less >>