Click here: The Weekly Beacon – September 2 2022
We will be giving some macroeconomic market updates on a weekly basis. No
recommendations will be given in this commentary and we encourage you to contact us
today if you have any questions regarding any observations.
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This weeks issue: Real Estate Sector, U.S. Home Sales, Rent in the U.S., Real Estate Divergence, Mortgage Rates, U.S. Metropolitans, MAC 360 Degree Income Fund, Oil Market, Manipulation, Volatility in Energy, Energy Stocks, Iran U.S. Deal, EV Producers, Lucid Motors Stock, Raising Capital, Shareholder Dilution, Uranium Sector, Nuclear Energy California Extends Nuclear Power, Japan Adopts Nuclear, Global Energy Shortage, Nuclear Energy is Clean Energy, Coal Consumption, ESG Investing, Natural Gas Prices, Germany and Canada Energy, Norway Leading the Way.
Rental and Sales Markets Diverge
The rental and ownership markets have diverged recently.
If you were in the market to sell your home in recent months, chances are you have rethought your decision. Sellers are not getting near as much money as home prices decline off their peaks.
It’s a different story for renters, if you recently had to rent a house or apartment in any major city, chances are you are paying much more than you did on your last lease.
Rent was a major reason CPI in the U.S. did not fall in July 2022. The category measuring the cost of renting a primary residence increased 6.3%, while the measure of owners’ equivalent of rent, or how much someone’s home would be worth if rented out, gained 5.8%.
Rent prices have accelerated over the last 12-15 months in the U.S.
Unsurprisingly, rent prices have accelerated the most in major city centers. Of the 50 largest metropolitan areas, prices in Florida cities such as Miami, Orlando, and Tampa, as well as New York City, San Diego, New Orleans, Charlotte, Nashville, Dallas, and Salt Lake City increased the most from the year prior, according to Zillow data. Apart from Salt Lake City, prices in all those cities hit records last month.
Rental demand remains strong and seems to be mainly driven by higher-income households who were likely shut out of the tight homeownership market. The fundamental problem in the housing market in both the U.S. and Canada is an undersupply of homes and a growing population, especially in areas where jobs are available (where people want to live). If young people cannot afford a down payment at current prices they will rent at any price out of pure necessity.
