Episode Details

In this Real Estate News Brief for the week ending May 22nd, 2021... the government's rental assistance program is helping landlords, rent growth speeds up, and the housing boom is adding value to opportunity zones.

Economic News

We begin with economic news from this past week, and a Treasury Department announcement that it has distributed $6 billion in rental assistance in the last two weeks. And more money is on the way. (1) A total of $21.6 billion was allocated to the program as part of a stimulus package approved in March. Another $25 billion had been approved in December. The funding is important to help pay off tenant debt to landlords as eviction moratoriums expire.

More Americans are heading back to work. The latest unemployment report shows that initial jobless claims were down 34,000 last week, to 444,000. (2) That's the lowest number we've seen in more than a year. More than 16 million people are still getting unemployment checks, but that number is also decreasing.

Several states say they plan to stop offering the additional $300 a week in federal benefits, to encourage people to get back to work. That program is supposed to end on September 6th. CNBC reports that a few states are also offering a one-time bonus for people who start working again. Those states include Arizona, Montana, New Hampshire and Oklahoma with bonuses ranging from 500 to $2,000. (3)

The latest round of housing data shows another drop for existing home sales. The National Association of Realtors says they fell 2.7% in April to a seasonally adjusted annual rate of 5.85 million homes. (4) It's the third month in a row that sales fell as the inventory crunch continues. NAR's chief economist, Lawrence Yun, expects to see more inventory "as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes."

Residential construction was also down in April. The U.S. Census Bureau reports a 13% decline in month-to-month single-family home starts. Permits were also down by 4%. (5) Economists had expected better numbers. Senior economist, Andrew Grantham, at CIBC Capital Markets told MarketWatch that the decline is probably the result of material shortages such as lumber, and possibly labor as well.

That decline didn't hurt builder confidence. The National Association of Homebuilders reports that the monthly index held steady in May. (6) Although builders face challenges, the NAHB says that builders remain confident about the strength of the housing market.

Mortgage Rates

Mortgage rates returned to that 3% level this last week. Freddie Mac says the average 30-year fixed-rate mortgage was up 6 basis points to exactly 3%. The 15-year was up 3 basis points to 2.29%. (7)

In other news making headlines...

Rent Growth Speeds Up

Rent growth sped up in March to its fastest pace since the beginning of the pandemic. Realtor.com says the median rent in the 50 biggest metros was up 2.7% year-over-year. Before COVID-19, the annual rate was 3.2%. (8)

Realtor.com says that two-bedroom units are seeing the most growth. They were up 5.2% annually. The website's chief economist, Danielle Hale says: "If the trend continues, renters could expect to be paying pre-pandemic rates by as early as this fall."

Tech hubs still have a ways to go because rents were high, and they fell the most as employees worked remotely from less expensive areas. But tech companies are announcing return-to-office plans, so rents in the tech hubs are starting to turn around.

Median Home Price Hits New High

Redfin is reporting a new high for the median home price. According to its researchers, the national median home price hit $370,528 in April. That's a 22% increase from a year earlier. (9)

That percentage may be somewhat skewed because people weren't buying many homes in April of last year, but Redfin's chief eco