Should Landlords be Tipped?

March 02, 2023

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What's important to know:

A TikTok video by two creators has sparked controversy by suggesting that tenants should tip their landlords for routine upkeep and being "on-call."
Many social media users have criticized the idea, arguing that tipping is meant for those who serve and get paid minimally.
Some users have suggested that it's appropriate to provide a small gift or bonus to a landlord who also works as the building manager, but it is not required.
The video has gone viral, with over 8.1 million views on Twitter and over 751,300 views on TikTok.
Tipping is a customary practice in the service industry, but there is no requirement to tip landlords for their services.

Mortgage Demand Plummets

Mortgage applications for home purchases fell by 6% compared to last week, and by 44% compared to last year.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances is now at 6.71%, the highest it has been since November last year.
Mortgage rates have increased by 50 basis points in just one month, which is affecting the housing market.
Applications for refinancing also fell by 6% compared to last week, and by 74% compared to last year.
The rise in rates is due to inflation, employment, and economic activity data that signals inflation is not cooling down as quickly as previously anticipated.

Homeowner tenure in the US has nearly doubled over the last two decades, contributing to the lack of for-sale inventory, and currently sits at a median of 12.3 years.
Older Americans are aging in place, and baby boomers are driving the general trend of longer homeowner tenure, with more than one-third of homeowners 65 and older holding onto their home for at least 33 years.
Renters move much more frequently, with the typical renter moving every two years, contributing to the imbalance between the number of people moving and the number of homes up for sale.
Homeowner tenure is likely to stay elevated in the coming decade due to a combination of factors, including older Americans staying in their homes longer, lack of affordability, lack of move-up buyers, historically high rental prices, and a shortage of homes for sale.
While remote work and millennials' prime moving years could help to alleviate the supply shortage in the future, the lock-in effect caused by higher mortgage rates and older Americans' desire to stay put in their homes point to lengthening tenure in the future.

Corporate home-flipping companies Opendoor and Offerpad reported dismal earnings last week.
These companies and their now-defunct counterparts, Zillow and Redfin, called iBuyers, buy and resell homes for profit, with minimal renovations performed.
The Fed raised interest rates last year, causing people to be reluctant to sell their homes and causing the housing market to cool slightly. Opendoor and Offerpad both suffered losses as a result.
The companies' losses indicate how, when the cost to borrow money is high, firms that don't add much value get hit hard.
Zillow and Redfin shut down their home-buying and selling platforms due to losses.

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