Podcasts Business Investing Real Estate News: Real Estate Investing Podcast The Real Estate News Brief: Inflation Slows But Sticky, Numbers of U.S. Homes Needed, Magic Dollar Amount for Retirement

The Real Estate News Brief: Inflation Slows But Sticky, Numbers of U.S. Homes Needed, Magic Dollar Amount for Retirement

Published: July 5, 2023, 10:13 p.m.

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In this Real Estate News Brief for the week ending July 1st, 2023... where we stand on inflation and rate hikes, how many homes we need to meet demand, and the amount of money Americans expect to need in retirement.
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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.
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Economic News
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We begin with economic news from this past week and a report on the Fed\\u2019s preferred inflation measure. The government released the latest CPI on Friday which shows the lowest rate of overall inflation since April of 2021. Prices rose a mere .1% which brought the annual rate down to 3.8%. That\\u2019s down from 4.3% in March. At the core level, inflation remains a little sticker. It omits food and energy, and shows a .3% price increase with an annual rate of 4.6%. (1)
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The good news is that inflation is coming down, but maybe not fast enough to please the Fed. The central bank skipped a rate hike in June, but Fed chief Jerome Powell is hinting at the need for another one or two rate increases. He said during the European Central Banks annual forum: \\u201cAlthough policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough.\\u201d (2)
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He talked about the risk of overdoing the rate hikes as compared to the risk of underdoing them and allowing inflation to keep going higher. He said those two risks are starting to come into balance but are not there yet. (3) One risk of overdoing it is the risk to the banking system, but new stress tests on the nation\\u2019s 23 largest banks show they are in good shape. In fact, the results show they are in better shape than last year, despite a more painful worst-case scenario. (4)
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The economy also continues to show resiliency. It was supposed to falter under the pressure of higher interest rates, but the latest revision on the GDP shows the first quarter was up a solid 2%. It was previously calculated at 1.3%. Second quarter results aren\\u2019t in yet, but officials are expecting to see a 1 to 2% expansion. (5)\\xa0
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The job market also remains strong. Initial claims have been rising very slowly, but this last week, they were down 26,000 to a four-week low of 239,000. Continuing claims were also down 19,000 to a total of 1.74 million. As MarketWatch reports: \\u201cStill no sign of a recession.\\u201d (6)
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As for the housing market, new home sales were surging in May. The Commerce Department says they were up more than 12% for the month to a seasonally adjusted annual rate of 763,000 homes sold. That\\u2019s quite a bit higher than Wall Street economists had anticipated. Those figures are volatile however, and are often revised, but demand is strong as inventory remains low, especially for existing homes. (7)
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And those sales were down in May. The National Association of Realtors says that pending home sales fell almost 3%, thanks to such low inventory. But despite the lack of contract signings, NAR\\u2019s Chief Economist Lawrence Yun says: \\u201cThe housing market is resilient with approximately three offers for each listing.\\u201d (8)
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That kind of demand is keeping pressure on home prices. The S&P CoreLogic Case-Shiller national home price index was up .5% in April. For the 20-city index, home prices were up .9%. Miami shows the largest year-over-year gain at 5.2%. Chicago is second at 4.1%. Other cities with strong home price growth include Atlanta, Charlotte, Cleveland, and Tampa. The biggest home price declines were in Seattle at 12.4% and San Francisco at 11.1%. (9)
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Mortgage Rates
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All this as mortgage rates creep higher. Freddie Mac says the 30-year fixed-rate mortgage was up 4 basis points this last week to 6.71%. The 15-year was up 3 points to 6.06%. (10)
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In other news making headlines\\u2026
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Zillow: U.S. Need 4.3 Million More Homes
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Zillow just published a report that shows just how many homes are needed to meet U.S. demand. The study says we are short 4.3 million homes, and the number of people needing a new home is twice the number of homes available. (11)
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A Zillow economist compared the situation to a game of musical chairs because there are just not enough homes for everyone who wants one. The report says low income families are getting hit the hardest with 68 percent of them living in shared spaces.
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Americans Put a Dollar Amount on Retirement
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Americans are placing a higher price tag on retirement, but a new study shows that they aren\\u2019t saving anywhere near enough. The research by Northwestern Mutual says the magic number for all age groups is $1.27 million, but it varies quite a bit from one age group to another.
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Of the 2,740 adults who participated in the survey. People in their 50\\u2019s expect to need $1.6 million which is the most of all the age groups. People in their 60\\u2019s and 70\\u2019s expect to need less than but close to $1 million. For the 20 to 40-something people, the figures were $1.2, $1.4, and $1.3 million for each of those decades.
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Unfortunately, the survey shows that most people have only a small fraction of those amounts in their savings account. And many see themselves working until 65 or older. Baby boomers generally say they\\u2019ll work until age 71.
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This all becomes somewhat inconsequential if you have a source for passive income and rental properties are one way to do that. If you\\u2019d like to learn more about how to avoid the retirement savings dilemma, be sure to join RealWealth at newsforinvestors.com. It\\u2019s free to join for complete access to our website. You\\u2019ll find hundreds of webinars and articles on how to invest in rental real estate including turnkey properties, newly built properties, single-family homes, small multi-family properties, and short-term rentals.\\xa0
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Check the show notes for links. And please remember to subscribe to this podcast! And leave us a review!
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Thanks for listening. I\'m Kathy Fettke.
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