July 12, 2019 REsimpli’s Real Estate News and Market Update

By Sharad Mehta  
July 12, 2019

REsimpli’s Real Estate News and Market Update

Rental Demand Rapidly Increases

                Demand for apartments increased by 11% in the 2nd quarter compared to a year ago, while rents have also increased. Rents have increased by 3% nationally to $1390 per month, according to data from RealPage. Despite this increase, 82% of renters say that renting is more affordable than owning according to a survey from Freddie Mac; the survey only reported 67% of people thinking that way a year ago.

                Originally, economists believe that millennials would start to buy homes as they entered their homebuying years but according to survey data, affordability is a major issue and they are forced to continue to rent. Rents have been dramatically increasing over the last few years, and the low unemployment job market has added to this pressure. The funny thing is that credit is easy to access and yet millennials still believe that traditional 20% down loans are required for their first homes and many rent despite being able to purchase with flexible loans that are still available.

Fed Chair Powell Comments on Homebuilders

                Homebuilders are facing a skilled labor shortage and increased materials costs due to the Trump administration’s immigration policy and tariffs, according to the head of the Federal Reserve. These same factors affect real estate investors doing flips and rehab work. This is contributing to the severe housing shortage which has caused home prices to keep climbing. First-time buyers are having affordability issues and having trouble buying. It’s interesting that Jerome Powell would testify to the senate about the homebuilding industry. He also pointed out that thousands of skilled workers left the construction industry following the housing crash that began in 2008 and never returned. This is evidenced by single family housing starts falling in May 6.4% from the month before, and 12.5% compared to a year ago according to data from the U.S. Census.

 

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%; they’ve kept this policy unchanged. The last release was on June 19 and they’ve decided to maintain the same rate.

Federal Reserve Outlook: The last meeting was June 19 and they are still holding steady. They think that although economic outlook is still generally positive (low unemployment, solid consumer spending), there are negative factors that they are keeping a close eye on. These include a slowdown in manufacturing, declining business investment, and trade tensions.

St. Louis Fed President James Bullard actually voted to cut the Federal Funds rate immediately which is a dramatic change from the policy which was to potentially continue raising rates. The fact that the Fed is now talking about potentially cutting or lowering rates is a dramatic change and has Wall Street and real estate investors excited as all asset bubbles inflate further.

Source: https://www.federalreserve.gov/newsevents/pressreleases/monetary20190619a.htm

 

Other Key Data:

Data is backward looking and takes time to compile. The data for May just was released On June 21st. Home sales data from the National Association of Realtors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

sources:
https://www.nar.realtor/sites/default/files/documents/ehs-05-2019-summary-2019-06-21.pdf
https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales

Unemployment Rate: 3.6 percent in May, unchanged since April

source: http://www.ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx

Author Bio

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 >>

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