Trust This. March 15, 2024.

1 big thing: White House housing boosting budget plan

The White House released its plan to lower housing costs before last week’s State of the Union speech.

Why it matters: The proposals provide a blueprint for policy changes the administration thinks could increase supply while helping lower costs for those with demand.

Some of the requests to Congress were:

  • Demand side: An annual tax credit of $5,000 a year for two years to middle-class first-time homebuyers, which is the equivalent of reducing the typical mortgage rate by at least 1.5% for two years on a median-priced home.

  • Supply side: A one-time $10,000 tax credit for middle-class homeowners who sell their starter home (homes below the county median home price) to another owner-occupant.

  • Demand side: Provide up to $25,000.00 in downpayment assistance to first-generation homebuyers.

  • Supply side: Expansion of the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rentals, and a new Neighborhood Homes Tax Credit to build or renovate affordable homes for home ownership.

  • Supply side: Create a $20 billion competitive grant fund to support the construction of more affordable housing across the country through local NGO’s and governments. The fund would support the construction of affordable multifamily rentals, incentivize local action to remove unnecessary barriers to housing development; and spur the construction of new starter and workforce homes.

  • Supply side: Proposing that each Federal Home Loan Bank double its annual contribution to the Affordable Housing Program to 20% of its net income, raising an additional $3.79 billion for affordable housing over the next 10 years.

For Rentals in particular, the White House is focusing on cracking down on corporate landlords and private equity firms’ sharing of information on rent pricing and on “junk fees” related to rentals, such as online payment convenience fees, mail-sorting fees, and trash collection fees.

Yes, but: Two proposals are getting industry pushback.

  • The title industry is unhappy with the push to waive lender’s title insurance on certain refinances.

  • Also, lenders aren’t happy with a CFPB push to mortgage lower loan closing costs.

What they’re saying: Logan Mohtashami, lead economist at HousingWire, argues that the demand-side proposals are unnecessary since there is no shortage of demand. However, the supply-side proposals could lower housing costs by increasing supply, which is sorely needed.

💭 Our thought bubble: In an election year, while the other party controls half of the legislative branch, none of the proposals that require Congressional action will come to fruition. Also, it’s doubtful that lenders will waive title insurance requirements no matter how loudly the bully pulpit pushes for it.

  • However, it clarifies the candidate’s policy positions regarding the real estate market.

2. Economics and demographics of the housing market

At last week’s NPLA conference, Lesley Deutch of Jon Burns Research and Consulting in Boca Raton told the audience that optimism is rising in the housing market.

Why it matters: Real estate investors who follow experts like Deutch on economic and demographic trends can stay ahead of the curve.

By the numbers: The slides of graphs and data made a few real estate market trends clear:

  • US Demographic growth is much less than historical growth, which results in slower economic growth because we don’t have the people to work to produce the goods and services.

  • When you don’t have enough people to work, you must pay them more.

  • Job growth is slowing but is still strong overall. Tech, finance, and commercial real estate sectors are in decline. Education and health services, leisure & hospitality (all lower-paying jobs) are growing in markets like Florida and Nashville

  • High-income job growth was highest in South Florida and falling in California.

  • Unemployment rates: Most states are below 4% (Cali is over 5%).

  • Supply chains have opened up, helping ease inflation. Geopolitical issues (Red Sea pirates) may slow this down again, however

  • Home price appreciation has been a huge driver of wealth generation via home equity increases. This increases consumer confidence as people are more comfortable with their financial situation

  • 66% of people in the U.S. are homeowners. The rest are renters.

  • The probability of a recession has declined from 63% in late 2022 to 39% today. Positive momentum is outstripping negative momentum.

  • Housing interest rates are bouncing around because of back-and-forth data and information from the Fed.

  • January new home sales rose 12% year over year, largely due to developers and builders buying down their buyers’ mortgage interest rates. Regular sellers can’t afford to do this, so those homes sit on the market longer, or prices are dropped.

  • Builders are averaging 3.3 net sales per community, outperforming the average of 2.4 sales per community, so they’re buying land and planning to build like crazy for the coming demand. The northeast and Texas, however, are suffering a little bit on the net sales per community index.

  • Affordability is still a major concern in Florida and California. Florida has always been traditionally cheap to buy, but now — relative to income — it’s very expensive.

  • Lowest-price homes have increased in price more than any other price point, pricing lower-income buyers out of workforce housing.

  • Mortgage payments on a median-priced home have almost tripled in the past three years. Apartment rents have likewise increased

Yes, but: Three factors that would improve affordability: Higher pay; Falling home prices; Falling mortgage interest rates.

Demographic Shifts

  • Net in-migration (legal and illegal): US Census says it was 1.2 million in 2022; CBO says 3.3 million; Others say it’s as high as 12 million.

  • In any event, immigration is increasing the number of available workers, bringing costs (inflation) down and demand up.

  • Over $40 trillion in wealth in the US is tied up in the generation born between 1960 and 1969. There will be a ton of wealth transfer over the next couple of decades. One way they’re doing this is by making the first home downpayment for their children and grandchildren.

  • We’ll continue to see many long-time residents of an area cashing out of their homes and moving not too far away to a lower-priced suburb. Meanwhile, younger workers will continue to move from high-priced urban areas to lower-priced urban areas.

What’s next: Rents should level off as all the new apartment supply comes online in 2024. But not much in the pipeline, so rents should start rising again after 2024

  • The wealth transfer from older to younger generations will boost millennials’ and Gen Z’s spending on homes and businesses.

  • Immigration will boost rental markets.

Ricardo Rosales, a mentor and serial entrepreneur, keeps his feet firmly planted in Texas and Venezuela. He was inspired by his family to transform from Navy diesel mechanic to the serial entrepreneur he is today. Listen in or watch as we discuss how he got from there to here, and his thoughts on transformational growth.

3. Catch up fast

  1. For those of you doing real estate in Highlands County, Florida, there’s a new affidavit that all grantees must sign and submit with any deed submitted for recording after March 11, 2024. You can get more information and download the new Roadway Status Affidavits at the Highlands County Clerk of Court.

  2. Airbnb has banned all interior cameras in hosts’ homes. New York Times

  3. Speaking of demographics (see panel #2 above), Lakeland, Port St. Lucie, Cape Coral, and North Port, Florida take the top 4 spots of the most increased population for metro areas between 2020 and 2023. Axios

  4. Adam Neumann’s real estate startup Flow is planning $300 million in Miami developments in an area known as tent city just a decade ago. Bloomberg (gift link good for 7 days only)

  5. Mortgage rates dip below 7% for the first time in four weeks. MPA Mag Online

4. Closing Thought

Screenshot from Welltory telling me I need to take a breather for the day. Photo: Joe Seagle

My morning routine is focused on collecting data for my body’s key performance indicators (KPIs).

Why it matters: Nothing can be changed if it’s not tracked and measured.

I sleep wearing my Apple Watch, and my iPhone is tucked under my pillow with the Sleep Cycle app running. I also wear an Oura Ring.

  • All of these track my health KPIs 24/7.

  • The ring tracks my heart rate variability, temperature, pulse, and sleep states.

  • The watch tracks all of those things as well as my respiration and heart rate BPM.

  • The phone is listening to me sleep and feeling my turns and tosses throughout the night to let me know if I’m snoring, coughing, talking, or not breathing.

As soon as I wake, I take my blood pressure with a cuff and my temperature with a thermometer that both automatically upload data to the cloud.

I also take a more detailed HRV reading snapshot that tells me whether my body is in a high-stress, recovery, or balanced mode.

The scale tells me my weight, body fat composition, muscle composition, heart rate, vascular age, and takes a 30-second EKG.

An electric toothbrush tracks how much pressure I use while brushing and how long I brush. Plus, a CGM constantly tracks my blood glucose levels.

All the collected data feeds into the Apple Health in my phone along with bloodwork results taken every three months at the local lab.

AI apps review the data in the background and give me insights on what I should be doing more of to improve the KPI’s for a longer healthspan. I also can share detailed reports of the data with my primary care physician and functional medicine doctor who use it to tweak medications and advice on nutrition and supplements.

The bottom line: I admit that I’m a bit of a fanatic about tracking KPIs related to my health.

  • However, we’re also focused on tracking KPIs related to the health of our business.

  • Each week we review the data related to sales and marketing, finance, and operations.

What’s next: This year, the goal is for everyone on the crew to have at least one KPI they’re responsible for tracking.

  • Because if we don’t track it, there’s no way we can change it.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! 

  • Our mailing address: PO Box 547945, Orlando, FL 32854-7945

  • Our physical address: 1901 West Colonial Drive, First Floor, Orlando, FL 32804


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