Fed’s Powell: There’s No Returning to Pre-Pandemic Economy

The chair says the U.S. economy has been permanently changed by the pandemic, and the central bank must understand and adapt to those changes before making decisions.

By Martin Crutsinger

WASHINGTON (AP) – Federal Reserve Chairman Jerome Powell said Tuesday that the U.S. economy has been permanently changed by the COVID pandemic, and it is important that the central bank adapt to those changes.

“We’re not simply going back to the economy that we had before the pandemic,” Powell said at a Fed virtual town hall for educators and students. “We need to watch carefully as the economy continues to get through the pandemic and try to understand the ways that the economy has changed and what the implications are for our policy.”

Powell said that, while it is not yet clear if the delta variant of COVID will have further impact on the economy, the country has already seen significant changes since the pandemic began shutting the country down in March 2020.

Those changes range from the increase in remote work, to restaurants offering more take-out meals, to real estate agents learning to show homes virtually, he noted. Many companies have already made large investments in technology to adapt to the challenges that the pandemic has presented.

“It seems a near certainty that there will be substantially more remote work going forward,” Powell said. “That’s going to change the nature of work and the way work gets done.”

Powell said the heavy investment by companies in new technology means there will be more jobs in the future associated with maintaining that technology but also potential job losses in industries focused on in-person contact. He said some of those industries may be moving to an “automated, no-contact model.”

This trend is already showing up in the jobs data, with the recovery slower in industries that rely on public interaction, such as travel, leisure and hospitality. Those are jobs disproportionately held by women and people of color and typically pay lower wages, Powell noted.

“It may be that some of these people will have a harder time finding their way back into the workforce without more education and training,” he said. He said there are millions of people who have lost service sector jobs and remain out of work and need to be supported. “That’s a part of the recovery that’s far from complete.” he said.

Speaking to the audience of students and educators, Powell said the pandemic could turn out to be an historical inflection point that will allow the current generation of students to turn the lessons learned into “profound tools of change.”

Students who have lived through the pandemic will see the world differently, he said.

“You have seen a world upended, but you have also seen a world that is rapidly changing — sometimes more in one week than some of us have experienced over the course of decades,” he said.

“This is an extraordinary time and I believe that it will result in an extraordinary generation,” Powell said.

At the town hall is an event started by Ben Bernanke, one of Powell’s predecessors as Fed chairman, and continued by former Fed Chair and now Treasury Secretary Janet Yellen. It seeks to highlight the importance of classes in economics.

Copyright 2021 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Judge Dismisses Antitrust Lawsuit, Favors NAR Over Top Agent Network

NAR’s Clear Cooperation policy placed limits on pocket listings, leading a members-only “top agents” network for non-MLS listings to file a lawsuit. The ruling questioned some aspects of Clear Cooperation, but the judge said antitrust does not give TAN a right to “hoard listings among themselves.”

By Kerry Smith

LOS ANGELES – Top Agent Network (TAN) filed a lawsuit against the National Association of Realtors® (NAR) and others, claiming an antitrust violation under NAR’s Clear Cooperation policy that placed new limits on pocket listings.

Exclusive listings must now be entered into the local MLS within one day after being publicly advertised, and MLS users who fail to do so could potentially lose access to their MLS.

In the case, U.S. District Judge Vince Chhabria ruled that TAN failed to show how NAR’s policy breaches antitrust law. He said TAN presented “a reasonable argument” for potential antitrust problems in some situations, but he also said, “TAN could never allege an antitrust injury from [NAR’s policy]” because the policy would improve the parts of TAN’s business model that make it anticompetitive.

He said NAR’s policy isn’t “anticompetitive to the extent that it prevents members of an exclusive listing service like TAN from concealing listings from NAR’s subscribers while simultaneously benefiting from access to NAR’s service.”

Under TAN’s business model, top agents in an MLS area shared listings among themselves first, however the “enter into the MLS within one day after publicly advertising” aspect of Clear Cooperation makes that difficult.

Chhabria also said that TAN is anticompetitive. Since it restricts membership to the top 10% of agents (by sales volume) in a market, it cannot use U.S. antitrust laws as a shield for its anticompetitive activities.

“The key pro-competitive benefit of [the MLS system] is that every NAR-affiliated MLS is open to any licensed real estate agent who is willing to pay the fees,” Chhabria said. He suggested that antitrust might be an issue for the courts to consider if another listing service was equally open to everyone.

Chhabria also noted that the top agents with membership in TAN earned that status working through the local MLS, and they “want to pull the ladder up behind them. … Instead of continuing to share listings with the open network of agents that supported their ascent, they would prefer to hoard choice listings among themselves.”

In a statement emailed to Inman News, TAN’s attorney – Paul T. Llewellyn, partner at Lewis & Llewellyn LLP – said the company was “exploring all available options to challenge” NAR’s Clear Cooperation Policy.

Source: Reuters (08/17/21) Scarcella, Mike; Inman News (08/17/21), Andrea V. Brambila

© 2021 Florida Realtors®

Lawmakers Want FTC to Investigate Zillow Over Antitrust

Members of House and Senate antitrust subcommittees asked the Federal Trade Commission to see if Zillow’s acquisition of ShowingTime could violate U.S. antitrust laws.

WASHINGTON – U.S. lawmakers want the Federal Trade Commission (FTC) to investigate potential antitrust violations over Zillow Group’s pending $500 million acquisition of ShowingTime, a scheduling platform for home showings.

Rep. Ken Buck (R-Colo.) and Sen. Mike Lee (R-Utah), ranking members of House and Senate antitrust subcommittees, reportedly sent the FTC a letter urging an investigation into the acquisition.

Zillow Group has made several acquisitions over recent years, including one that allows it to operate as a broker. In February, Zillow announced plans to purchase ShowingTime, which it says will remain an open platform. The acquisition is still pending.

In their letter to the FTC, the lawmakers said they believe the acquisition could “further entrench Zillow’s consumer information advantage to the detriment of homebuyers and their competitors.” The letter also refers to Zillow’s Zestimate, alleging it could “unduly influence” homeowners who may be trying to sell their homes.

“The effect of Zillow’s acquisitions appears to be that it can effectively tell the homeowner what their home is worth, buy the home from the homeowner for that amount, and then turn around and immediately sell the home for a higher price,” the lawmakers stated in the letter to the FTC.

Zillow provided the following statement to GeekWire: “Since our announcement to acquire ShowingTime, Zillow and ShowingTime have worked constructively with the FTC staff in their thorough review of the transaction. … Key to our mission is our work to modernize the real estate transaction – which has been notoriously resistant to consumer-friendly change over the decades. By building an open and equitable service which is available to all agents and brokers, which will include ShowingTime, we are helping move the industry towards a more efficient, digital future that works to benefit consumers.”

Source: “Zillow Group Faces Antitrust Scrutiny From U.S. Lawmakers Over $500M ShowingTime Acquisition,” GeekWire (Aug. 13, 2021) and “Lawmakers Flag Zillow Deal for FTC Scrutiny,” Axios.com (Aug. 12, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Builder Confidence Hits 13-Month Low as Demand Drops

Homebuilder confidence hit its lowest level since July 2020. While labor shortages and supply challenges played a role, buyer “sticker shock” is the new concern.

By Kerry Smith

WASHINGTON – Higher construction costs, supply shortages and rising home prices pushed builder confidence to its lowest reading since July 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

Builder sentiment in the market for newly built single-family homes fell five points to 75 in August. It’s still in positive territory since anything about 50 means builders are on the happy side of the monthly study, but it’s trending in a negative direction.

“Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs,” says NAHB Chairman Chuck Fowke, a custom home builder from Tampa. “Policymakers need to find long-term solutions to supply-chain issues.”

“Higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales,” adds NAHB Chief Economist Robert Dietz. “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.”

The HMI index gauging current sales conditions fell five points to 81, and the component measuring traffic of prospective buyers also posted a five-point decline to 60. The gauge charting sales expectations in the next six months held steady at 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 74, the Midwest dropped two points to 68, the South posted a three-point decline to 82 and the West registered a two-point drop to 85.

The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

© 2021 Florida Realtors®

Market shift may be coming.

Bidding Wars Cooling: Prepare Now for a Market Shift

Some frustrated and discouraged buyers dropped out of the market, but many may jump back in as inventory grows, properties linger on the market and bidding wars ease.

CHICAGO – The hallmarks of the current market – low inventory, multiple offers and rapidly selling properties – won’t be around forever, and even experienced agents should prepare for changes.

To prepare, agents should stay in touch with buyers and even sellers they previously worked with – ones who unsuccessfully tried to succeed in the current market. Agents can send them relevant information about market changes, such as such as new inventory or construction.

As the market cools a bit, agents may discover that they need to show more homes over a longer period of time. They should also prepare to filter buyers more to avoid “tire kickers” who say one thing but end up doing another. They shouldn’t be afraid to ask qualifying questions and set limits on how long they will work with such clients.

In addition, agents should study comparable sales and analyze current market conditions, both locally and nationally. As markets change, the level of prep for a sale may also need to change, along with the frequency of communication and updates.

Moreover, it’s important for a new agent to understand what a seller’s closing costs are in their market, including title or escrow fees. Buyers should understand the provisions that allow them to get out of a contract and the timeframes for doing so. And buyers should be told to send all contract questions and interpretations to the agent rather than friends or relatives.

Finally, agents should stay current on the latest real estate information. They can do that by reading, attending conferences and webinars, and simply talking to agents, appraisers, builders and lenders.

Source: Inman (08/03/21) Ameer, Cara

Anyone?

Build a 3D Home? Fla. a Prime Market to Click ‘Print’

By Louis Archambault

3D builders see Fla. as a prime market, and a home is currently under construction in Tallahassee. But the state’s building code doesn’t include 3D techniques yet.

MIAMI – As building material prices spike to impact Florida’s new housing construction, a new form of construction looms as a potential avenue for ensuring homebuyers have access to the new homes they need – and can afford.

From Florida to California, 3D-printed homes and communities are being constructed as proof-of-concept residences to demonstrate the alternative construction capabilities.

In Riverhead, N.Y., a two-bedroom, two-bath printed home has been listed through Zillow at $299,999 and at one point was the most-viewed home on the internet. Start-up companies and developers eager to disrupt the industry envision a community in a desert landscape near Palm Springs, where they anticipate building what they call the nation’s first neighborhood of 3D-printed houses.

In a first for Mexico, a 3D-printed neighborhood is emerging for families who live on as little as $3 a day.

Not surprisingly, these companies have their eyes on Florida as a prime target for 3D-printed neighborhoods of the future. As the nation’s third-most populous state and one of the fastest growing in the country, Florida is a preferred landing spot for this emerging technology. In July, the first 3D-printed home began construction in Tallahassee. The three-bedroom, two-bathroom house is expected to be sold for between $175,000 and $200,000

Additionally, the speed and ease of the 3D printed homes could be useful in rapid rebuilding campaigns as a result of hurricanes or other natural disasters. To be sure, the economic benefits of 3-D printed homes are enticing.

An added benefit of 3D-printed homes is the cost. The companies developing and building 3D homes assert the cost of building a home can be cut by anywhere from 30% to 40% versus traditional construction methods. Interiors and exteriors can be printed between 12 and 24 hours; labor costs are also reduced as fewer workers are required. Overall, concrete printing slashes production time from months to days and streamlines the construction process.

Yet, the law must catch-up.

Building a 3D-printed home is quite different from the standard methods of construction. The Florida Building Code and the real estate industry must take this fact into account.

During the 3D process of the current and most prevalent method, concrete and various additives are premixed, to be laid in a foundation pattern that would be similar to toothpaste coming out of a tube. The mix then hardens into a concrete structure.

In one current prototype, the 3D printer is an oversized, movable printer, ranging anywhere from 10 X 10 feet to 100 x 100 feet in size, sitting in the middle of the construction site, fabricating concrete walls and the roof from within. In another prototype, the printer is on a metal scaffold over the construction site and moves in a two-dimensional square printing the structural walls.

The process is straightforward; it is already being used to build smaller structures such as barbecues and fountains.

However, to be a truly viable construction alternative in Florida, it must have the static strength to withstand hurricanes as required by the Florida Building Code or must evolve to be poured with rebar structures similar to current construction methods.

To this end, the entities seeking approval for building 3D-printed homes in Florida, the Florida Building Commission and the real estate industry all need to understand the process and work to implement relevant codes, guidelines and rules for approval of this process. Additionally, to have meaningful regulations for this technology, attorneys will have to understand the additive and printing process.

Like any other new construction process, the promise of better and cheaper construction will need to be weighed against the risk of construction defects or other construction methods that may be cheaper but easier to implement, such as prefabricated houses that are created offsite but installed onsite.

Although still in the prototype stages as an emerging technology, 3D-printed homebuilding feels like an inevitability as the process becomes more advanced, easier, cheaper, stronger and more consistent. The creativity and ingenuity of these start-up companies will eventually stake a claim in the home-building process.

However, it will be up to professionals in the private and public sectors to ensure homebuyers will gain not only from the homes’ price benefits but benefit from the oversight of the process to ensure the safety and efficiency of the 3D printed homes.

© 2021 Miami Herald. Distributed by Tribune Content Agency, LLC. Louis Archambault is a board-certified real estate attorney and vice chair of the Real Estate Property Group at the law firm Saul Ewing Arnstein & Lehr in Miami. This is an opinion piece written for Business Sunday’s “My View” space in the Miami Herald. The views expressed do not necessarily reflect those of the newspaper.

Words to Sell Houses Changed During Pandemic

Most listing descriptions once started with things like “granite countertops” and “wood floors” – but words like “large” and “spacious” became common this past year.

NEW YORK – “Large,” “great,” “full” and “spacious” were among the most commonly used words to draw homebuyers to real estate listings over the past year, as room to spread out became more important in the pandemic, according to a new study from Point2 Homes.

Point2 Homes pinpointed the most popular home description words and phrases in listing ads. The research team examined 43 million words from more than 640,000 listings nationwide. They identified trends and compared findings to a 2019 analysis to see how the most popular keywords have changed since the pandemic.

“Granite countertops,” “hardwood floors” and “stainless steel appliances” have long reigned as the most common words in listing ads, but fell from the top three spots this year. Instead, many of the most popular adjectives refer to the spaciousness of a home, such as “large” and “great.”

Other most common words, in listings for both single-family homes and condos, were “garage” and “parking,” the study found.

“The popularity of these home description keywords points to the fact that, during a year when planes were grounded and social distancing wreaked havoc, it was the car that helped people escape the confines of their homes and find comfort elsewhere,” the study said.

Beyond specific words, the following were the most popular home features and amenities from Point2 Homes listings’ review:

Single-family homes top 20

  1. Garage
  2. Walk-in closet
  3. Full bath
  4. Open floor plan
  5. Hardwood floors
  6. Granite countertops
  7. Stainless-steel appliances
  8. Laundry room
  9. Additional bedrooms
  10. Fenced backyard
  11. Double vanity
  12. Covered patio
  13. Formal Dining room
  14. Parking
  15. Natural light
  16. Large/spacious living room
  17. Bonus room
  18. Plenty of room
  19. Water heater
  20. Eat-in kitchen

Condos top 20

  1. Parking
  2. Garage
  3. Hardwood floors
  4. Walk-in closet
  5. Washer/dryer
  6. Stainless-steel appliances
  7. Granite countertops
  8. Full bath
  9. Open floor plan
  10. Shopping/restaurants
  11. Fitness center
  12. Laundry room
  13. Within walking distance
  14. Natural light
  15. Large/spacious bedrooms
  16. Tennis courts
  17. Easy access
  18. Quartz countertops
  19. Move-in ready
  20. Conveniently located

Source: “Real Estate Keywords: What 2021’s Most Popular Home Description Words Reveal About Post-Pandemic Buyers,” Point2 Homes (July 7, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Freddie Mac Rolls Out New Lower-Cost Renovation Mortgage

MCLEAN, Va. – Freddie Mac announced a new CHOICEReno eXPress mortgage, which helps homebuyers and homeowners finance the cost of small-scale renovations with a single-close mortgage.

By Kerry Smith

The mortgage giant says “CHOICEReno eXPress” helps buyers and owners reduce costs compared to using credit cards or unsecured financing for small-scale projects.

Freddie says its CHOICEReno eXPress fills a need for a streamlined, affordable financing option for buyers who plan to make cosmetic renovations, such as replacing windows and doors, roof repairs, minor remodeling and interior or exterior painting. Freddie posted a list of frequently asked questions on its website.

“CHOICEReno eXPress expands upon the Freddie Mac CHOICERenovation mortgages, which were designed to help address the nation’s aging housing supply … to support the increasing demand for cost-effective financing solutions,” says Danny Gardner, senior vice president of client and community engagement for Freddie Mac’s Single-Family business. “CHOICEReno eXPress will help homebuyers and homeowners reduce their out-of-pocket costs by offering more affordable loan terms than using credit cards or unsecured financing when making small-scale renovations.”

Lenders can sell CHOICEReno eXPress mortgages to Freddie Mac when the loan proceeds are used to pay for renovations of up to 10% of the home’s as-completed value (up to 15% in rural regions with high needs classification). Depending on the purchase price, it doesn’t require special lender pre-approval or lender recourse. A completed inspection is required, however, to verify that the planned renovations were completed.

“Lenders with an interest in providing a renovation mortgage to their clients but limited experience in renovation and construction lending, will also find CHOICEReno eXPress is an attractive offering because of its streamlined operational requirements,” says Gardner.

Freddie Mac also announced that it updated its requirements to give lenders greater flexibility when offering its flagship CHOICERenovation mortgage:

  • Allowing 100% of the cost of materials to be advanced and renovation costs to be paid directly to a home improvement store
  • An ability to use proceeds to pay off short-term financing for prior renovations of an existing home
  • Allowing a borrower to not occupy a primary residence while renovations are ongoing

Launched in 2019, the CHOICERenovation proceeds can also be used to renovate a property damaged in a natural disaster or for renovations help a borrower prevent damage from a future disaster.

© 2021 Florida Realtors®

This isn’t a thing, Trust me.

Tab for ‘Climate Change Risk’ Added to Some Listings

What threat do heat, flood, drought and fire pose to a house as the earth warms? Redfin says it’s adding ClimateCheck, scaled 1-100, to each listing on its website.

SEATTLE – Real estate brokerage Redfin has begun to publish climate risk data for each of its listings and throughout its website. It says the information will help homebuyers and homeowners understand the future threat of fire, heat, drought and storms to U.S. properties as the earth warms.

The ClimateCheck rating is based on a 0–100 scale and rates the risk faced by counties, cities, neighborhoods and ZIP codes. The ratings reflect future risk and how that t will change over time.

“A home is a huge financial investment, and these days consumers are seeing all too many examples of climate-related risks, like fires, floods and heatwaves,” says Christian Taubman, Redfin’s chief growth officer.

A new consumer survey found that Americans are factoring climate change into their homebuying decisions, according to Redfin. About half of 2,000 survey respondents who plan to move in the next year said extreme temperatures and an increasing frequency or intensity of natural disasters played a role in their decision to relocate. About one-third of respondents said rising sea levels influenced their decision to move away – or to – a destination.

Nearly 80% of consumers said that an area seeing an increased frequency or intensity of natural disasters would make them hesitant to buy a home there. In addition, more than one-third of homeowners said they have spent at least $5,000 in protecting their homes against climate threats.

Source: Redfin

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Mortgage Rates: 6-Week Streak Under 3%

The average 30-year mortgage rate fell to 2.77% this week, down from last week’s 2.80%, in part due to investor uncertainty over the COVID-19 delta variant.

WASHINGTON (AP) – Mortgage rates were flat to lower last week, with the average for the key 30-year home loan below 3% for the sixth straight week.

Uncertainty over the surging delta coronavirus variant and its potential effect on the U.S. economic recovery remained as a backdrop suppressing mortgage rates.

Mortgage buyer Freddie Mac reported Thursday that the average for the 30-year mortgage fell to 2.77% from 2.80% last week. The benchmark rate, which reached a peak this year of 3.18% in April, stood at 2.88% a year ago.

The rate for a 15-year loan, a popular option among homeowners refinancing their mortgages, remained at a historically low 2.10%.

Concerns have been mounting in global financial markets around the delta variant’s spread in the U.S., Europe and Asia, and especially in China, which is on high alert as it confronts hundreds of fresh cases. China has sealed off residential communities, suspended flights and trains, and ordered mass coronavirus testing in Wuhan, the city where the disease was first detected in late 2019. Although China’s numbers are small compared with outbreaks elsewhere, its containment strategies and the subsequent impact on its large economy are being closely watched.

In the latest evidence of a briskly rebounding U.S. economy and job market, the government reported Thursday that the number of Americans applying for unemployment benefits fell last week by 14,000, to 385,000. Benefits applications have mostly fallen steadily since topping 900,000 in early January. Still, they remain high by historic levels.