
💼 Rising Prices
briefcase | invest smarter
In Today’s Issue…
Homeowners are so reluctant to sell that even Marie Kondo would have difficulty convincing them to let go. 'Does this house spark joy?' ‘No, Marie, but my 3% mortgage rate does!’
Three in five Americans think the U.S. is in a recession. It's like collectively misremembering the ending of The Sixth Sense. Spoiler alert: Bruce Willis is alive, and so is the economy!
Airbnb hosts are turning to influencers to fill their rentals. Because nothing screams 'book now' like a TikTok dance challenge in a rented bungalow.
MAIN STORY

As spring blossoms, so do home prices, continuing their unrelenting climb. Despite high mortgage rates and waning buyer demand, the median U.S. home sale price soared to $387,600 in mid-May. With inventory levels lower than the number of affordable avocados in a California supermarket, it's no wonder prices are sticky.
It seems as though housing prices are rising so fast it’s like they’ve been taking financial steroids. Next thing you know, they’ll be failing urine tests and blaming it on protein shakes.

According to data from Redfin, home prices have been on a steady upward trajectory, climbing 0.5% monthly for the past six months. This brings the annual increase to a robust 7.3%. "We're seeing a classic case of supply and demand imbalance," noted Lily Katz, a real estate analyst. "When you have fewer homes for sale and steady or increasing demand, prices naturally rise."
The problem? There aren’t enough homes on the market. Although new listings have increased by about 8% year-over-year, inventory remains significantly below typical spring levels. New listings are still down a staggering 20% compared to pre-pandemic numbers.
"Move-up buyers feel stuck because they’re ready for their next house, but it just doesn’t make financial sense to sell with current interest rates so high," said Sam Brinton, a Redfin Premier agent in Salt Lake City. The median monthly housing payment has hovered around $2,854, shy of April's all-time high. The recent dip in mortgage rates to 7.02% from 7.22% hasn't been enough to pry homeowners from their comfortable nests. They're clinging to their historically low pandemic-era rates like toddlers to their favorite blanket.
The irony is not lost on anyone that high costs are pushing pending home sales down 4.2% year-over-year. This is the biggest decline in three months, yet prices keep rising. Many homeowners stay put rather than venture into the unpredictable waters of today's housing market. They’re the proverbial cats that have tasted the milk of low mortgage rates and aren’t about to give it up.
Bonnie Phillips, a Redfin Premier agent in Cleveland, offered a glimpse into the creative lengths buyers are going to. "Some of my younger buyers are considering buying a multifamily home and renting half of it out in order to make their monthly payments pencil out," she said. This trend of house hacking is becoming increasingly common among savvy millennial buyers, desperate to break into a market that seems to be playing a cruel game of keep away.
The sliver of good news for buyers? Sellers are often motivated. "Many of today’s sellers are selling because they need to: One of my clients is selling due to a family emergency, and another couple is selling because they had a baby and simply don’t have enough room," Brinton shared. Buyers should note that many sellers are willing to negotiate, potentially offering a rare glimmer of hope in an otherwise bleak landscape.
Despite these small mercies, the overarching theme remains: housing prices will keep rising. The laws of supply and demand, combined with homeowners' reluctance to sell, create a perfect storm that keeps the housing market firmly tilted in favor of sellers.
In summary, if you're waiting for a significant drop in housing prices, you might wait a long time. The housing market is as stubbornly bullish as a cat on a hot tin roof. So, buyers, brace yourselves for a challenging journey, and sellers, enjoy the ride while it lasts.
HEADLINES

Is Perception Reality? A Harris poll reveals that nearly three in five Americans mistakenly believe the US is in a recession, with the majority blaming the Biden administration. Despite this, key economic indicators show growth: 55% of respondents believe the economy is shrinking, although GDP has been rising; 49% think the S&P 500 is down, though it increased 24% in 2023 and over 12% this year; and 49% assume unemployment is at a 50-year high, despite it being under 4%, a near 50-year low. Additionally, 72% of respondents feel inflation is rising, although it has decreased significantly from a post-Covid peak of 9.1% to around 3-4%. This persistent pessimism poses a challenge for President Biden's re-election bid. (Guardian)
Airbnb Stress: Ahead of summer 2024, short-term rental hosts face increased competition and unpredictability, with 1.57 million listings across Airbnb and Vrbo, a 12.3% increase from last year, according to AirDNA. Average occupancy improved by 2%, but March 2023 saw a 4% drop from 2022. Hosts like Emily Burke in Tulsa, managing 40 listings, and Rick Kenworthy in Scottsdale, managing 91 listings, turn to direct bookings and social media strategies to stand out. Kenworthy increased direct bookings to 25% in Q1 2024, adding $500,000 in revenue, while Burke collaborates with influencers to boost last-minute bookings. However, some hosts, like Missouri's Ryan Villines, remain cautious due to the risks and lack of insurance protection associated with direct bookings. (BI)
This Week in ‘Please No’: This week, mortgage rates increased, with the average 30-year fixed loan rising to 7.17%, according to Bankrate's latest survey of large lenders. Rates have fluctuated this year amid uncertain expectations for the Federal Reserve's anticipated rate cuts. Compared to four weeks ago, the 30-year rate was 7.39%; a year ago, it was 6.90%. The 15-year fixed rate is now 6.56%, up from 6.35% a year ago. The 30-year jumbo loan rate is 7.23%, compared to 6.66% last year. The survey also noted that 30-year fixed mortgages included an average of 0.3 discount and origination points, which are fees to reduce the mortgage rate and to process the loan, respectively. (Bankrate)