13% Boost in Home Sales by 2026

Happy Thanksgiving Dwellers! Welcome to another edition of Dwellings Digest, a realtor and investor driven newsletter simplifying real estate, exploring the economy-stock-real estate link, adding a fun twist with niche topics and more. Enjoy!

Quote of the day - In real estate, we don’t just build houses; we create homes and futures.

In today’s edition - Explore key economic shifts in the latest market trends, from Trump’s tariff impact on China to rising consumer confidence. In real estate, NAR forecasts a 9% increase in home sales by 2025, though affordability challenges persist. As Lawrence Yun, Chief Economist at NAR, states, "We need to address the supply shortage to ensure homeownership remains within reach for first-time buyers." Plus, discover the latest rent trends, new housing data, and insights into NYC’s broker fee changes. Stay ahead with expert analysis to guide your investment decisions.

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Rates & REITS

Average going rates as of Nov 26 2024

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🏛️ Economic & Market Sentiment

Trump’s sharp tariff hikes could speed up China’s shift to new markets and offshore factories

• Shifting Export Strategies: Chinese exporters, like those in Yiwu, have reduced reliance on the U.S. market, with the share of exports to the U.S. dropping from 19% in 2018 to 15% in 2023. Instead, they are focusing on Southeast Asia, Africa, South America, and the Middle East, regions offering higher margins and growing demand.

• Impact of Proposed Tariffs: Trump’s proposed 60% tariff hikes on Chinese imports, combined with plans to end the $800 duty-free exemption, could significantly pressure exporters. Analysts predict this would halt trade for many smaller businesses, while low-income U.S. consumers may face higher prices for daily-use goods.

• Relocating Production Abroad: To counter rising tariffs, Chinese manufacturers are shifting production to Vietnam, Indonesia, and Mexico. For instance, Shenzhen HIHO Luggage has expanded operations to Indonesia, employing 600 workers there to maintain competitive pricing for U.S. markets.

• Market Evolution Under New Policies: If enacted, Trump’s blanket tariffs would spill over into furniture, toys, and textiles, sectors heavily reliant on Chinese production. Biden’s continuation of strategic tariffs on items like solar cells and EVs signals ongoing challenges for China’s export economy, potentially reshaping global supply chains.

Consumer Confidence Hits 2-Year High As Recession Fears Fade: Stock Market Optimism Soars To Record High

• Consumer Confidence at Two-Year High: The Consumer Confidence Index rose to 111.7 in November, the highest since early 2022, driven by a robust labor market. The Present Situation Index climbed 4.8 points to 140.9, with 33.4% of consumers reporting jobs are plentiful and optimism about future job availability at its strongest in nearly three years.

• Recession Fears and Inflation Ease: Recession concerns fell to record lows, with the Expectations Index at 92.3, well above recessionary thresholds. Inflation expectations moderated to 4.9%, the lowest since March 2020, reflecting growing optimism about stabilizing prices.

• Stock Market Optimism Soars: A record 56.4% of consumers expect stock prices to rise in the next year, signaling heightened confidence in the markets. Additionally, 34.6% believe interest rates will decline within 12 months, the highest share since April 2020.

• Spending and Sector Trends: While plans to buy homes remained flat, spending on services like travel and health care surged, aligning with consumer preferences for experiences over goods. Market performance was mixed, with the Nasdaq 100 and S&P 500 rising 0.5%, while small-cap stocks and the Dow Jones fell amid policy concerns.

🎢 Impact on Real Estate

NAR Forecasts 9% Increase in Home Sales for 2025 and 13% for 2026, with Mortgage Rates Stabilizing Near 6%

• Housing Affordability Challenges Persist: Chief Economist Lawrence Yun emphasized that sustained price growth threatens to deepen wealth inequality and lock out first-time buyers. He called for increased housing supply, particularly in high-demand markets constrained by restrictive zoning.

• Decline of the "Silver Tsunami" Myth: Deputy Chief Economist Jessica Lautz debunked the idea that a wave of older homeowners downsizing will solve inventory shortages. Instead, young adults face intense competition in both the housing and rental markets, necessitating new construction to meet demand.

• Mortgage Rates Stabilize at Higher Levels: Yun predicted that ultra-low mortgage rates of 3-4% are unlikely to return, with 6% becoming the new normal due to persistent budget deficits and inflationary policies.

• Equity Divide Widens: Rising cash buyer activity and 35 million mortgage-free homeowners underscore growing challenges for first-time buyers, who now must save longer or have higher incomes to enter the market—a trend pricing out teachers and first responders.

🎙️ RE Spotlight

Zumper National Rent Report

• National Rent Slowdown Reflects Seasonal Shift: Median one-bedroom rents remained flat at $1,534, while two-bedrooms dipped 0.4% to $1,902 in November, signaling the low-demand months ahead. This mirrors broader inflation trends, with annual rent growth of 2.3% aligning with the 2.6% U.S. inflation rate.

• NYC Rent Declines for the First Time in 6 Months: The median one-bedroom rent in New York City dropped 2.9% to $4,370 in November, coinciding with the pending implementation of the F.A.R.E. Act. This shift could reshape leasing dynamics as broker fees transition to landlords.

• Arizona's Resilient Housing Demand Amid Supply Surge: Despite 60,000 new units delivered in the Desert Mountain region, rents in cities like Phoenix (-2.1%) and Scottsdale (-1.2%) saw only modest annual declines, underscoring Arizona's strong rental demand.

🏕️ Niche-RE

Housing Starts & Building Permits Down Again in October

• Building Permits Decline by 0.6% in October 2024: The seasonally adjusted annual rate for building permits in October was 1,416,000, 0.6% below the September rate and 7.7% lower than October 2023, indicating a slowing pace in new construction authorizations.

• Housing Starts Drop 3.1% in October: The seasonally adjusted annual rate for housing starts in October was 1,311,000, reflecting a 3.1% decrease from September and a 4.0% decline from the same month in 2023, signaling a slowdown in new home construction.

• Housing Completions Up 16.8% Year-Over-Year: October saw a total of 1,614,000 housing completions at a seasonally adjusted annual rate, 16.8% higher than October 2023, highlighting continued progress in the completion of residential projects despite a slowdown in new starts.

NYC City Council Passes FARE Act: Shifting Broker Fees from Renters to Landlords

• NYC Passes FARE Act to Shift Broker Fees to Landlords: The City Council's 42-8 vote on the Fairness in Apartment Rentals (FARE) Act shifts broker fee responsibility to landlords, ending the current system where renters pay up to 15% of their annual rent in broker fees.

• Potential Rent Increases Following Broker Fee Shift: Opponents argue that landlords may increase rent to cover the costs of broker fees, leading to higher long-term rental expenses for tenants, despite the bill's intent to improve affordability.

• Legislation's Impact on Rent-Stabilized Units: Councilmember Chi Ossé points out that 47% of NYC rentals are rent-stabilized, which legally prevents broker fees from being passed on through higher rents, offering some relief for tenants in these units.

🖼️ Chart-Tastic

🌍 Dwelling of the Day

Four Seasons Private Residences in Walt Disney’s Golden Oak

7Bed 10Baths, 9,254sqft

Asking $15.8M - Would you buy or refer to a buyer?

link to listing

And…that's a wrap on this edition!

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