Rocket Fuel Newsletter – 06/24/2024
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In this edition: Detroit hosts some of the world’s best golfers, the rental market makes an impact on residual income, and consumer and homebuilder metrics provide a glimpse into today’s spending habits.
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Fuel Up! 🚀
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Retail Sales Slows
Consumer spending is starting to show signs of slowing down according to the latest retail sales report. In May, retails sales were up 0.1%, falling below expectations.
Additionally, the numbers for April were revised lower to a 0.2% decline. Persistent inflation is a key contributor to the pullback in spending from consumers.
Homebuilder Confidence Drops In June
Sentiment for U.S. homebuilders dropped in June, bringing it to the lowest levels of the year. Mortgage rates consistently hovering around 7% and elevated construction financing costs continue to weigh on builder sentiment.
Rocket Mortgage Classic Week in Detroit
The PGA Tour returns to Detroit and the Detroit Golf Club this week for the sixth Rocket Mortgage Classic. The event has hosted some exciting playoff finishes in the past, and this week has a star-studded field that includes last year’s champion, Rickie Fowler; Will Zalatoris; and the PGA Tour debut of 15-year-old Miles Russell. Who will take home the trophy this week?
The rental market has gotten out of control for lower-income renters.
In 2022, a staggering 22.4 million households were cost-burdened from rent payments, and when adjusting for inflation, since 2001 rent has increased by 21% while household incomes have only increased by 2%.
The above rent-price-to-income gap between the orange and purple line is especially problematic for lower income earners. The group’s after-rent income has fallen in each of the last 20 years, and it is estimated that the average low-income renter only has $310 of income to spare after paying rent – not nearly enough to cover normal expenses.
Compare the orange line (lower-income renters) to the teal line (median renter) below and the disparity becomes even more pronounced.
What are possible solutions to this issue?
More accessible affordable housing is key – affordable or subsidized housing would help lower-income earners make ends meet. To achieve this, the Department of Housing and Urban Development (HUD) has announced a wave of grants and programs in the first half of 2024 designed to shrink the affordability gap. Rental assistance programs are also available at the federal, state and county levels across the country.
Additionally, it is important to educate those who are thinking about purchasing a home or eventually want to purchase a home, regardless of income level. Having a strong financial education, whether it be about the benefits of locking on a home and mortgage payment or how to balance a budget in general, is vital to developing and executing on a plan to increase residual income and turn it into a future down payment.
- A Drop In Bond Yields Could Signal A Long-Awaited Break For Would-Be Homebuyers
- HUD Awards $10 Million On Grants To Combat The Homeownership Gap Through Housing Counseling
- Jobless Claims Stay Near A 10-Month High. The End Of The School Year Might Be The Reason.
- National Association Of REALTORS® Reminds MLSs And Brokerages Of June 18 Deadline To Opt In To The NAR Settlement
- Commercial And Multifamily Mortgage Debt Outstanding Increased In First-Quarter 2024
Great times last week! Over 70% of solvers finished in less than 2 minutes, led by Michael Bazavilvazo’s lightning-fast 13 seconds.
This week’s puzzle gets 3 Rockets out of 5.
Good luck!