4/13 Fedspeak
New Home Builds Are Booming, Squatters Are Becoming More Common, Rates Get Crushed
This newsletter is 622 words and should take about 9 minutes to read.
Read last 2 week’s ago newsletter here → "3/30 Balancing Act"
Amazon reportedly relied on Indian contractors to label purchases at 'Just Walk Out' stores. An earthquake hit the east coast which was felt from NYC to Philly. Tesla’s stock is getting cooked after the company reported its first drop in vehicle sales since 2020. A part of California’s Pacific coast highway crumbled into the ocean. And Barstool founder Dave Portnoy showcased North Italia’s pizza on his latest pizza review.
tl;dr
Resale homes are getting cooked while new construction thrives
The average mortgage rate is 7.3%
Squatters are becoming more common as laws that were enforced during COVID have not been repealed.
Phoenix
Transaction volumes have been low for many months in the re-sale segment of the housing market. However the same cannot be said of the new home segment.
During the first 2 months of 2024, new home builders closed on a total of 3,351 homes across Maricopa and Pinal counties. This is the highest total since 2006 and is up almost 16% from last year. New homes are taking a lot of the demand away from re-sales. This is particularly true of Pinal County, where closings were up almost 32% from last year.
New home closings are up just over 10% in Maricopa County. Re-sale closings are down 0.4% compared to the first 2 months of 2023. New homes are very competitive on price. Keep in mind builders offer very generous in house financing options that 3rd party lenders rarely can beat.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of April 12th, 2024, the CMI has decreased to 111.5. Down 2.1 basis points from 2 weeks ago
Supply has increased by 7 basis points and demand has decreased by 5 basis points.
Rates
7-Day rate change: +24 basis points
YoY change: +85 basis points
Average interest rate: 7.3%
Squattin’
Squatter (noun) “squat·ter” - A person who settles in or occupies a piece of property with no legal claim to the property.
Why has squatting become so bad recently? Blame COVID—partly.
When the pandemic hit and renters across the country lost their incomes, some states passed laws making it harder for landlords to evict them. Two of those states, California and Washington, are notable for their leniency toward those who can’t afford to pay rent—or, in some cases, simply choose not to. And unemployed renters aren’t the only ones taking advantage.
An unintended consequence of those laws is the growing number of squatters moving into people’s homes and rental properties. Using the laws in place to prevent their eviction.
One influencer has even shared squatting tips, advising illegal immigrants on how to “invade” people’s vacant homes and use progressive squatting laws to their advantage. His video had about 4 million before he closed his account.
On the other side of the isle, Florida Governor Ron DeSantis signed a bill into action which seeks to provide homeowners remedies against squatting and increases penalties on squatters. Texas (go figure) is another state that enforces harsh squatting laws.
Arizona has a handful of laws for getting rid of squatters. The first law is the guest removal law. Under this law, you have the power to remove a guest who isn’t named on the lease immediately. You can simply call the police to help you get rid of the squatter.
S&p 500 vibe check
Meme, tweet, & fact of the week
Potatoes were the first vegetable to be grown in space.