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In this Real Estate News Brief for the week ending February 5th, 2022... the growth of construction spending for single-family homes, worries over rising mortgage rates, and the futuristic auction of a Tampa Bay home.

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, and good news about the job market. The government says that U.S. companies added 467,000 jobs in January. That\u2019s after the creation of 510,000 jobs in December. Wall Street economists has only predicted 150,000 new jobs for January and 200,000 for December. (1)

There\u2019s no lack of jobs, but many people have missed work recently because of the omicron surge. As MarketWatch reports, a record 7.8 million people called in sick last month. That helped drive the unemployment rate higher from 3.9% to 4%. But the omicron wave is receding in many parts of the country, and the number of unemployment applications was down for a second week in a row. There were just 23,000 people applying for benefits last week. (2)

The homeownership rate moved slightly higher in the fourth quarter of last year. Realtor.com reports a total of 83.5 million owner-occupied households for a homeownership rate of 65.5%. That\u2019s .3% higher than the third quarter. If you break that down by age group, people who are 65 or older have the highest homeownership rate at 79.4%. The lowest homeownership rate is 38.3% for people younger than 35. Back in 2004, the homeownership rate hit a high of 69.2%. (3)

2021 was a big year for private residential construction spending. Money spent to build single-family homes was up 33% compared to 2020. It was up about half that much for multi-family. The two categories that saw the least amount of spending growth were public safety and office space. Spending for those categories was down 33 and 32% respectively. (4)

Mortgage Rates

Mortgage rates are holding steady at around 3.55% for a thirty-year fixed-rate mortgage. Freddie Mac says the average for the 15-year was down 3 basis points this last week to 2.77%. The mortgage guarantor says the economic impact of the omicron surge is keeping mortgage rates from rising higher, but it also expects them to start creeping higher again this spring and summer. (5)

In other news making headlines...

Keeping Rates Low with Rate Locks

Home buyers are keeping a close watch on mortgage rates, and some are taking advantage of \u201crate locks.\u201d It costs extra to buy a rate lock, but Realtor.com says it can prevent a big surprise when it\u2019s time to buy. The most common rate lock is for 30 days, but buyers can get them for various amounts of time, from 15 days to 45 days or longer. (6)

Buyers can also lower their mortgage rates by paying discount points. One point costs 1% of the loan amount, and could reduce your mortgage rate by about .25%. It\u2019s not time to panic however. Interest rates are still at historic lows. The National Association of Realtors doesn\u2019t expect them to rise that quickly. It is predicting they\u2019ll average just 3.9% by the end of this year.

Young Adults Continue to Live with Parents

Many potential homebuyers are young adults who continue to live with their parents as the pandemic shakes out. NAR says that 17.8% of adults ages 25 to 34 moved back in with mom and dad in 2020. That\u2019s the highest level since 1960. In 2021, that percentage remained high at 17%. (7)

But the trend has evolved from the initial impact of the pandemic, to other related trends. NAR\u2019S Jessie Lautz writes: \u201cSome young adults may have recently moved back home due to the flexibility of remote work trends and to avoid paying high rents.\u201d She says it could also be due to job losses, or getting an education, but she says: \u201cRegardless of the reason, living with family may provide a benefit to potential first-time home buyers.\u201d

If children are living at home rent-free, it makes it easier for them to save up for a down payment.

Tampa Home Hit Auction Block as NFT

A Tampa Bay home is going on the auction block as the first home to be sold as an NFT. That stands for Non-Fungible Token which is a unique digital image that\u2019s linked to a blockchain as proof of ownership. The home was turned into an NFT by first putting the home into an LLC, and then transforming the home\u2019s certificate of authenticity into an NFT. (8)

What are the benefits of buying or selling a home as an NFT? It reportedly expedites the sale process, and according to some experts, is the future of real estate. As one person described the process to the Tampa Bay Times: \u201cYou\u2019re essentially selling a company and a company owns that house.\u201d You can read more about that and our other stories by clicking on a link in the show notes at newsforinvestors.com.

You can also join RealWealth for free at newsforinvestors.com. As a member, you have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more.

Thanks for listening, and please remember to hit the subscribe button, and leave a review!I'm Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/coming-up-u-s-jobs-report-for-january-11643980058?mod=mw_latestnews

2 -https://www.marketwatch.com/story/u-s-jobless-claims-drop-23-000-to-238-000-as-omicron-wave-recedes-11643895188?mod=economy-politics

3 -https://www.realtor.com/research/homeownership-february-2022/

4 -https://www.mortgagenewsdaily.com/news/02022022-construction-spending

5 -http://www.freddiemac.com/pmms/

6 -https://magazine.realtor/daily-news/2022/02/02/buyers-rush-to-lock-in-rates

7 -https://magazine.realtor/daily-news/2022/01/28/young-adults-move-back-home-in-record-numbers

8 -https://www.washingtonexaminer.com/news/florida-tampa-bay-nft-home-real-estate