“You can think of this meeting that we had (this week) as the ‘talking about talking about’ meeting.” – Jerome Powell
The time is coming.. one year ago, Powell tried to stabilize the markets by saying the Fed is not even thinking about thinking about raising rates. The time has come to start talking about talking about it. Come August’s Jackson Hole meeting they will actually talk about it. Some already are. Jim Bullard, FOMC member, said yesterday, he wants to see rates go up in 2022. This talking about talking about is the beginning of rates shifting. As the Fed starts tapering, we just need to stay in front of the communication with our buyers and sellers as rising rates will impact both demand and supply.
Congratulate Your Buyers!
Last week I shared a look into the equity cushion this market is creating. CoreLogic released their Homeowner Equity Report showing homeowners who have a mortgage realized an increase in their equity of 19.6% on average year over year for a total gain of $1,900,000,000,000. This combines both appreciation gain and principle reduction.
With 62% of all homes having a mortgage, the $1.9 trillion equates to $33,400 gain per mortgaged household. In the state of Colorado, our average gain was higher! $47,000 per mortgage household.. WOW! When homes around us are selling for $50,000, $100,000 or $1,000,000 over asking; $47,000 might not sound like a lot. But it is. So, let’s put it into perspective.
Take a minute to write up a congratulations to those clients you sold a home to in the last five years. They not only have more wealth then the median American.. but I’m guessing they have more equity wealth than the Average as well. Ask them.. are they taking advantage of that? I bet you have some ideas of how they could 😉
It Is Cheaper To Rent
You will start hearing that more as rates start to trend up and appreciation continues. You will also hear about how unaffordable homes are. Rental rates did stall during COVID.. landlords needed tenants to stay in their homes. But now that more people are vaccinated and moratoriums are being lifted, rents are going up.
Invitation Homes appeared on CNBC Friday morning giving their plan to buy $1 Billion more in single family rentals by the end of 2021. They are not doing that hoping only for appreciation. They are doing that because they know.. inventory will be tight for years forcing rental rates up. Lawrence Yun was quoted as saying “America is facing a massive housing shortage due to multiple years of underproduction in relation to population growth. Expect both rents and home prices to outpace overall consumer price inflation in the upcoming years.”