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REGULATION

Biden Administration Takes Action on Soaring Rent Costs

What you should know:

• The Biden administration announced new actions to protect tenants and make renting more affordable.

• The announcement includes a “Blueprint for a Renters Bill of Rights” that sets clear guidelines to help renters stay in affordable housing and a call to action, dubbed the “Resident-Centered Housing Challenge,” that aims to get housing providers as well as state and local governments to strengthen policies in their own markets.

• The housing market continues to pose a serious problem for people who don’t own their homes — and for the economy overall with average rental prices have continued to increase rapidly, disproportionately hurting vulnerable households that spend the bulk of their budgets on rent.

• Tenant leaders, housing experts and legal organizations have pushed the Biden administration to do everything in its power to tackle soaring rent costs, arguing that America’s housing issues are an economic crisis.

• The announcement includes no conditions on federal financing, for example, but instead gets closest with a carrot approach, like providing incentives to landlords who accept vouchers.

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MARKET

Rates, Inventory, and Prices: Understanding the 2023 Housing Market

• Goldman Sachs published a paper titled “2023 Housing Outlook: Finding a Trough” which argues that home sales are bottoming out, while the home price correction has a bit longer to run.

• According to the report, "We suspect that existing home sales could decline slightly further but will likely bottom in Q1," and "We expect a peak-to-trough decline in national home prices of roughly 6% and for prices to stop declining around mid-year [in 2023]."

• According to Zonda Chief Economist Ali Wolf, since the beginning of the year, there has been an uptick in buyer interest related to three key things: seasonality, acceptance, and discounts.

• Seasonality: The housing market traditionally is the slowest at the end of a given year, picks back up in January, and goes into full force during the spring selling season starting around the Super Bowl. Early indications are that buyers are out shopping again.

• Acceptance: Consumers have been mourning the loss of record-low mortgage rates. For example, if a consumer was able to afford the monthly payment of a $500,000 house at the beginning of last year, without changing their budget, they are now looking for a house in the $350,000 range. For some consumers, they are unwilling or unable to move forward with a purchase. For others, they are entering the acceptance phase.

• Discounts: Homebuilders now represent over 30% of overall housing inventory. Builders are in the business of building and selling homes. As a result, we’ve seen builders offer both price cuts and incentives to entice consumers.

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PEOPLE

From Reality TV to Real Estate Mogul

• Mauricio Umansky is an entrepreneur who has built a global real estate empire with a sales volume of $57.4 billion since 2011.

• He started his career as a real estate agent for his brother-in-law's company, Hilton & Hyland, where he earned more than $200,000 in commissions and was known as their No. 1 agent for more than eight years straight.

• Umansky's company, The Agency, has expanded across the United States with more than 70 offices and also has presence in Canada, Mexico, the Netherlands, Turks and Caicos, the Dominican Republic, the Cayman Islands and the Bahamas.

• His company earned $12.4 billion in sales volume in 2022, up from $11.3 billion in 2021, and his listings mostly inhabit the eight-figure range.

• Umansky's goal is to be the biggest global luxury real estate boutique in the world and he attributes his success to being a "contrarian" and buying real estate at a time when others were not.

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MARKET

How Millennials Are Coping with Inflation in the Housing Market

• 92% of millennials who intended to buy a house this year say inflation has impacted their goal, according to a survey from Real Estate Witch.

• 28% of those millennials are delaying their buying plans, while the remainder say they’re responding by saving more money for the purchase (59%), spending more than expected (36%), buying a fixer-upper (26%), and buying a smaller home (25%).

• The median price for an existing house was $366,900 in December, just 2.3% higher than a year earlier, and down from $370,700 in November.

• Interest rates on mortgages have eased, with the average for a 30-year fixed-rate loan being 6.21% as of Jan. 24, compared to 7.32% in late October.

• Experts say buyers shouldn’t wait around for mortgage rates to drop to where they were in 2020 and 2021, because it’s unlikely to be seen again anytime soon.

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