Can Elon Musk’s New Role Lower Mortgage Rates?

Good morning, 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 - A great property isn’t found, it’s created with vision and passion.

In today’s edition - We delve into the latest inflation trends, dissect their effects on mortgage rates, and analyze signals of resilience within the labor market. With a cautious Fed outlook and economic shifts, our expert insights equip you with a comprehensive view of market stability and real estate dynamics.

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Rates & REITS

Average going rates as of Nov 14 2024

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🏛️ Economic & Market Sentiment

Economic Signals Show Slower Inflation Progress: What It Means for Mortgage Rates and the Labor Market

• Producer Price Index (PPI) Gains Highlight Inflation Stagnation: October’s PPI rose 0.2% with portfolio management, airline fares, and healthcare driving service cost increases. Economists predict these gains might support a firmer October reading in the Fed’s preferred inflation metric, the core PCE index.

• Labor Market Hints at Resilience: Weekly jobless claims reached a six-month low, suggesting the October slowdown in job growth was temporary, despite recent inflation challenges and disruptions from hurricanes and labor strikes.

• Fed's Rate Cut Path Remains Uncertain: With a 79.1% probability of a December rate cut, resilient job data and steady inflation pressures suggest a potentially shallower Fed cutting cycle, as further rate reductions may be limited in 2025 amidst stable economic indicators.

Market Slips as Fed Cools Rate-Cut Hopes Amid Steady Inflation and Economic Resilience

• Stocks Retreat Amid Diminished Rate-Cut Expectations: The Dow fell by 208 points (0.5%), the S&P 500 by 0.6%, and the Nasdaq Composite by 0.6%, as Fed Chair Jerome Powell’s cautious tone dampened investor hopes for near-term rate cuts.

• Treasury Yields Reflect Fed's Stance: Following Powell’s remarks, the 2-year Treasury yield rose to 4.351%, while the 10-year yield declined to 4.44%. This shift signals cautious optimism but lowers market expectations for aggressive rate cuts.

• Odds of December Rate Cut Lowered to 62.4%: Investor confidence in a December rate reduction fell from 82.5%, highlighting the Fed’s gradual approach to managing inflation, now expected to reach the 2% target on a "bumpy path".

🎙️ RE Spotlight

Commercial Real Estate Lending Growth Fueled by Strong Acquisition Financing and Liquidity in Key Markets: Q3 2024

• CBRE’s Lending Momentum Index Surges: Commercial lending showed solid growth, with CBRE's Lending Momentum Index climbing 13% from Q2 and 15% year-over-year, driven by strong acquisition financing across asset classes, notably large office transactions in NYC.

• Life Companies and Alternative Lenders Take Lead: Life companies comprised 43% of CBRE’s non-agency loan closings, while alternative lenders like debt funds saw origination volumes soar 70% annually, capitalizing on improved liquidity and favorable base rates.

• Multifamily Lending Boosted by Lower Rates: Government agency lending on multifamily assets increased 40% to $28B, with the Agency Pricing Index dropping to 5.8% in Q3, reflecting greater proceeds for borrowers amid favorable market conditions.

Can Elon Musk’s New Role Lower Mortgage Rates? Exploring Economic Efficiency's Impact on Housing

• Musk's Role in Federal Efficiency and Housing: Appointed to streamline government spending, Musk's efforts to trim the federal budget could impact mortgage rates if he manages to reduce the federal deficit—a critical factor affecting Treasury yields and thus mortgage rates.

• Deficit Reduction Could Pressure Rates Lower: As mortgage rates correlate with the 10-year Treasury yield, successful deficit management could ease government borrowing needs, potentially bringing down mortgage rates that have surged past 7% in 2024.

• Market Uncertainty on Fed and Fiscal Policies: Analysts remain cautious about Musk's potential to shift fiscal policies significantly, but any progress in government spending efficiency could make rate reduction more feasible, especially as inflation stabilizes near the Fed's target.

🏰 RE State Zone

Landmark Properties Acquires The Ridge Clemson: Key Insights on Growing Student Housing Demand

• High Occupancy Rates Reflect Demand: The Ridge Clemson, recently acquired by Landmark Properties, is 97% occupied for Fall 2024, highlighting strong demand in student housing near Clemson University. Clemson's enrollment reached 28,747 in 2023, up from 19,453 in 2010, positioning the school as the second-largest in South Carolina by enrollment.

• Amenities and Community Appeal: Built in 2018, The Ridge Clemson features premium two-bedroom apartments and four-bedroom townhomes with modern amenities such as high-speed Wi-Fi, in-unit laundry, and a resort-like common area with a pool, lazy river, and basketball court. These features are designed to appeal to students seeking more than just proximity to campus, a trend gaining traction nationwide.

• Broader Market Context: Landmark Properties continues to expand its $14 billion portfolio, now managing over 72,000 beds across 115 communities. Despite slowed rent growth in 2024, national occupancy rates remain robust at 94.5%, indicating that student housing continues to be a resilient asset class, even as Yardi Matrix projects supply declines post-2024.

🏕️ Niche-RE

Discovery Senior Living’s 2025 Expansion Strategy: Smart Growth, Market Insights & Optimized Operations

• Strategic Caution in Senior Housing Development: Discovery Senior Living's CEO plans a measured expansion strategy for 2025, aligning new projects with long-term market stability to avoid future supply imbalances and ensure high resident satisfaction.

• Margin Growth & Market-Driven Rate Adjustments: By implementing tailored rental rate increases across various markets, Discovery has optimized occupancy and boosted margins, with Provincial Senior Living surpassing a 40% margin by adopting a lean operational model.

• Empowering Regional Teams for Enhanced Resident Care: Discovery’s regional management structure strengthens local support and operational efficiency, with dedicated corporate specialists in resident services ensuring consistent, high-quality care across its 340-community portfolio.

🖼️ Chart-Tastic

👾 Interesting in Social

🌍 Dwelling of the Day

Rare Custom Log House in Anchorage, Alaska!

4Bed, 2 Bath - 3,443sqft on private 1.86 acre

Running through Rabbit Creek included.

Link to Listing

And…that's a wrap on this edition!

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