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In this Real Estate News Brief for the week ending February 11th, 2023... What\\u2019s ahead for single-family rentals and build-to-rent homes, along with a look at why Los Angeles landlords may be fuming right now, over a new law.

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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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We begin with economic news from this past week, and comments from Fed Chief Jerome Powell, about last week\\u2019s surprisingly strong January jobs report. He said of the report: \\u201cIt was certainly stronger than anyone I know expected.\\u201d (1) The blowout report surpassed expectations with 517,000 new jobs, and a decrease in the unemployment rate to 3.4%. (2)\\xa0

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With 5 million more jobs than there are workers to fill them, Powell is concerned that competition for workers will lead to continued inflationary wage growth. He says the \\u201cdisinflationary\\u201d process has begun, and expects to see significant declines in inflation this year, but expects it will take more rate hikes, and all of next year to get inflation back to the 2% level, especially with such a strong job market. Powell says: \\u201cIf we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more.\\u201d

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On the positive side of the jobs report are comments from Federal Reserve Governor Lisa Cook who believes the Fed\\u2019s rate hikes \\u201ccan be accomplished without a large increase in unemployment.\\u201d And that raises hope for a \\u201csoft landing.\\u201d (3)

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There\\u2019s still talk that the federal funds rate will peak at 5% to 5.25%. We are currently in\\xa0 the 4.5% to 4.75% range. New York Fed Chief John Williams is among those who see 5% as a peak short-term rate, although he reiterated during an interview with the Wall Street Journal that there is still much work to be done.

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As for the weekly jobless report, initial claims were 13,000 higher than the week before, but they are still near pandemic lows. The total was 196,000. Continuing claims were up 38,000 to a total of 1.69 million. There has been a gradual increase in those continuing claims which may indicate that it\\u2019s taking longer for people to find new jobs. (4)

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Mortgage rates ticked up slightly. Freddie Mac says the average 30-year fixed-rate mortgage was 3 basis points higher at 6.12%. The 15-year was 11 points higher at 5.25%. (5)

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In other news making headlines\\u2026

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A new analysis by Green Street says that single-family rentals will be \\u201cwell-positioned\\u201d for the next five years. GlobeSt.com reported on the analysis by John Pawlowski who says that single-family rentals will benefit from strong demographics, affordable price points, and limited single-family construction. Pawlowski also expects SFR communities to benefit from the 35 to 44-year old age group which is expected to grow at double the rate of other age groups.\\xa0 He says that many of these communities are in the Southeast, either existing, planned, or under construction. (6)

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The Green Street report also describes this asset class as \\u201cresilient\\u201d with a \\u201cfirm floor\\u201d for rents and values. The fact that renting has become more affordable than owning contributes to this outlook. But he does warn about headwinds. He says expects higher operating costs to continue without much relief in sight. That includes costs for repairs, maintenance, and property taxes. There are also political risks ahead for this asset class, due to potential regulation that mainly targets institutional investors.

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New build-to-rent homes are also expected to do well this year. Brad Hunter of Hunter Housing Economics told GlobeSt.com that he expects to see another \\u201cup\\u201d year with somewhat slower leasing activity. But he sees this as a temporary lull with flat rent growth for the next few quarters. He says: \\u201cBy this Fall, we\\u2019ll see rent growth come back again, and probably fairly strongly.\\u201d He\\u2019s predicting rent growth of 5 to 6% by 2025 or even sometime next year. (7)

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A limited supply of new single-family homes will push demand higher for renters, especially among Millennials with growing families. He says the spotlight is on the Southeast with \\u201ccontinued strong demand and solid performance in BTR, even during 2023, but at an even greater level from 2024 to 2028.\\u201d And he says that \\u201cFlorida is going to be one of the strongest markets\\u2026 but Georgia and the Carolinas will also see a lot of strong performance.\\u201d

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Los Angeles is adding another financial burden to the business of being a landlord. The city council approved a new law that would force landlords to pay relocation costs, if they hike rents more than 10%. Relocation costs would be three times the fair market rent, plus another $1,400 in moving expenses. (8)

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This is just the final part of a tenant protections package that the council put together after Covid emergency measures expired. The new ordinance would apply to tenants in newer homes who are not already covered by existing rent control laws. There are 84,000 of those homes in L.A., all built after 2008.

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That\\u2019s it for today. Check the show notes for links at newsforinvestors.com. Please remember to hit the join button to become a RealWealth member. It\\u2019s free to join, and free to access the data on our site. We just held an all-day virtual live event with property teams from markets across the country. We\\u2019ll be uploading videos to our website from that event for people who missed it. And don\\u2019t forget to subscribe to our podcast, and follow me on Instagram for market updates @kathyfettke.\\xa0

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Thanks for listening. I\'m Kathy Fettke.

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1 - https://www.marketwatch.com/story/powell-says-strong-jobs-report-shows-fed-needs-to-keep-raising-rates-but-he-expects-significant-declines-in-inflation-rate-in-2023-11675794928?mod=federal-reserve

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2 - https://www.marketwatch.com/story/u-s-adds-517-000-new-jobs-in-january-in-sign-labor-market-still-strong-11675431419?mod=home-page

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3 - https://www.reuters.com/markets/us/feds-cook-january-job-gains-increase-hopes-soft-landing-2023-02-08/

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4 - https://www.marketwatch.com/story/jobless-claims-climb-13-000-to-196-000-still-near-pandemic-era-low-11675949780

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

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7 - https://www.globest.com/2023/02/08/2023-will-be-another-strong-year-for-btr-despite-slowing-rent-growth/

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8 - https://www.dailybreeze.com/2023/02/07/new-law-in-la-landlords-must-pay-relocation-costs-if-they-raise-rents-too-high/