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In this Real Estate News Brief for the week ending May 14th, 2022\\u2026 why lumber prices are falling, what the FHA is doing to discourage investors, and the new Google mapping tool that could help house hunters.

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. Inflation appeared to slow down a bit last month. The government reported a slight decline in the Consumer Price Index from an annual rate of 8.5% in March to 8.3% in April. But that\\u2019s coming off a 40-year high, so we haven\\u2019t come down much. Plus, the so-called \\u201ccore rate of inflation\\u201d - which omits prices for food and gas - was .6% higher. That was a disappointment on Wall Street because analysts had forecast a lower .4% increase. (1)

As reported by MarketWatch, many economists expect inflation to slow down, but they say it will probably take a while for that to happen. Supply chain issues and the labor shortage are two big reasons that prices keep rising.

The decline was also not enough to put consumer minds at ease. The University of Michigan says its consumer sentiment index fell to a ten-year low as of this month. It went from a reading of 65.2 in April to 59.1. A survey shows that most Americans expect overall inflation to remain at the 5.4% level for the next year and at 3% for the next five years. (2)

Mortgage Rates

Mortgage rates also crept a little higher last week. Freddie Mac says the 30-year fixed-rate mortgage rose 3 basis points to an average of 5.3%. The 15-year was down 4 points to 4.48%. (3) The mortgage company says that many homebuyers are continuing with their plans but are paying about one third more per month than they would have a year ago.

In other news making headlines\\u2026

Builders Getting a Break on Lumber Prices

Lumber prices are headed lower. They fell below $800 per thousand board feet last week. That\\u2019s about 30% lower than they were at the beginning of the year, but they are still much higher than they have been historically. The National Home Builders Association says they\\u2019ve been so high that homes were $18,000 more expensive than they were in previous years, just because of high lumber prices. (4)

A recent survey by John Burns Real Estate Consulting shows that prices may be coming down a little because of softening demand for entry-level homes. And, the COO of Sherwood Lumber, Kyle Little, told Insider: \\u201cWe expect prices in the long term to be challenged with the affordability and rising interest rate headwinds.\\u201d

Landlords Lose in Appeal to CA Supreme Court

The California Supreme Court rejected a request by landlords to review a lower court ruling that impacts the Costa-Hawkins Rental Housing Act. If you haven\\u2019t heard of Costa-Hawkins, it\\u2019s legislation enacted in 1995 that prevents California cities from imposing rent control on single-family homes, condominiums, and residential properties built after 1995. (5)

There was concern that San Francisco landlords were circumventing eviction laws by raising rents so high that tenants would move out. The city called them \\u201cbad faith\\u201d rent increases that were used to evict tenants. The city then passed an ordinance in 2019 to prevent that from happening. It included a way to compare rent increases to market rates, and to check if there had been a recent eviction attempt.

Landlords sued, but lost their case in lower courts. In 2020, a Superior Court judge said: \\u201cCosta-Hawkins does not protect a landlord\\u2019s right to use a pretextual rent increase to avoid lawfully imposed local eviction restrictions.\\u201d The high court\\u2019s decision last week, allows the lower court ruling to stand.

FHA Gives Owner-Occupants First Dibs on Foreclosures

The Federal Housing Administration will make investors wait their turn, for a look at foreclosed properties. The FHA announced that owner occupant buyers, government entities, and HUD-approved nonprofits will get first dibs during a 30-day exclusive time period. It will also provide time for buyers to get a loan if they need one. (6)

The FHA says it\\u2019s doing this to support a goal to reduce the number of homes that investors are buying and turning into rentals, and to help people who want to become homeowners. Buyers must provide a signed statement saying they intend to live in the home. They also have 15 days to back out of a deal if they get \\u201cbuyer\\u2019s remorse.\\u201d

Google Street View Get \\u201cImmersive\\u201d

Google is adding a new feature to its mapping software that will help house hunters. It combines satellite and street view images so that users can fly over an area and then drop down to street level to take a closer look. Some people say the aerial view looks like you\\u2019re flying over a property with a drone. Google calls it an \\u201cimmersive view.\\u201d (7)

It\\u2019s being introduced in New York and Los Angeles. Google plans to expand soon to new areas.

That\\u2019s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!

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Thanks for listening. I\'m Kathy Fettke.

Links:

1 - https://www.marketwatch.com/story/u-s-inflation-rate-slows-to-8-3-cpi-finds-after-hitting-40-year-high-11652272713?mod=home-page

2 - https://www.marketwatch.com/story/consumer-sentiment-hits-ten-year-low-amid-high-prices-umich-survey-finds-11652451173?mod=economic-report

3 - https://www.freddiemac.com/pmms

4 - https://magazine.realtor/daily-news/2022/05/11/lumber-prices-tumble-to-lowest-level-of-2022

5 - https://www.sfchronicle.com/bayarea/article/State-Supreme-Court-rejects-a-challenge-by-17166499.php

6 - https://caanet.org/calif-supreme-court-snubs-appeal-of-costa-hawkins-case/?mkt_tok=NTU5LVRFTi05NDgAAAGEXbZRUIFaYfDr8n_JnaducPEN7VatF5PpAR34RTKWv7UiK3Y8lW_ce1Ko7WQ8Ot94wKy1cFzjQ3HgtJy6wLdJXjpjwPON50XI1dFc5Q

7 - https://magazine.realtor/daily-news/2022/05/11/fha-gives-buyers-exclusive-sneak-peek-at-foreclosures

8 - https://magazine.realtor/daily-news/2022/05/11/fha-gives-buyers-exclusive-sneak-peek-at-foreclosures

9 - https://magazine.realtor/daily-news/2022/05/12/new-google-map-feature-offers-immersive-view-of-streets