Rocket Fuel Newsletter – 07/15/2024
AI has dominated the technology space for the last year or so, leaving internet users unsure if the entity on the other end of the computer screen is real or just another bot. While we have been able to rest easy knowing in-person interactions are real, that might all change very soon! Researchers at Tokyo University have developed a “skin” that will allow robots to move their faces and even smile!
In this edition: Inflation is cooling (raising rate cut questions), the Tour de France crosses the halfway mark, and we dive deep into rent regulations in the U.S.
Read more about Tokyo University’s uncanny technology advancement here.
Fuel Up! 🚀
CPI Shows Inflation Cooling Faster Than Expected
The latest Consumer Price Index summary published last week shows a year-over-year overall inflation rate of 3%. Will this give the Federal Reserve the “confidence that inflation is moving sustainably toward 2%” they are looking for to cut the federal funds rate for the first time since 2020? Paired with a cooling labor market, it is looking more and more likely we will see some movement before the end of the year.
The Economic Impact Of Le Tour
The Tour de France is now over halfway done, having completed 15 of 21 stages. Every day, for 21 days, the top cyclists in the world bike for an average of over 100 miles per day, with only 2 days of rest during the entire tour. Why would anyone subject themselves to such torture? Well, money, obviously. But the athletes aren’t the only ones cashing in.
Hosting cities pay between $100,000 and $150,000 just to host a single stage – and that doesn’t include the potential additional millions invested in updating roads and infrastructure in anticipation of the event. While this may sound like a lot upfront, hosting cities often multiply their investment through an influx in tourism, often profiting more than $20 million.
Read more about the tour and its economic impact.
Mark Zachary, Next Step Home Loans, LLC
Tell us about the beginning of your career. What got you started?
A friend of my father-in-law was in the mortgage business and was introduced to him back in 1993. [I] went to the to the library and checked out several books on mortgages, the mortgage business, terms used and how it basically worked. After a couple of weeks, I felt I was ready to go hit the streets.
It just so happened that the very first referral I got was the mayor of Austin, TX. The loan went great, and [Mayor] Bruce Todd became a referral partner of mine, referring others to help me get going. Bruce passed away a few years ago but I'll always remember him being the very first one. I worked for this mortgage broker for two years and decided that I was ready to open up my own broker shop.
Tell us about some of your biggest lessons you’ve learned in your tenure.
I think one of the biggest lessons I've learned throughout my tenure is that this can be a very stressful business and you should always keep an eye on your health and make sure that you're taking breaks to relax and recharge on a daily, weekly and yearly basis.
The fact is that not everyone will they appreciate what you do for them and they'll try to take advantage of you if you let them. So you have to decide who you WILL work with and who you WON'T with. I think knowing who you WON'T work with is more important than knowing who you WILL work with.
There are plenty of people that will pay for your services as a mortgage professional as you guide them through this process. Find those that will appreciate you and deliver a service that is second to none. Let your competition deal with and work with those impossible prospects. Realize that not everyone is your ideal client.
What is one thing you wish you knew when you got started?
The value of staying in touch with your past clients and database. I have literally helped thousands of people buy and refinance their homes. Had I done a better job of staying in touch with my database and staying top-of-mind with them, I wouldn't have to be going after any new referral partners.
What are some of your goals?
My immediate goal is to rebuild the business I once had. After a severe health scare back on September 25, 2021, I pretty much lost all of my referral partners. When you're in the hospital for six weeks and then in rehab/therapy 4 days a week (now just 2) learning to walk and talk again and completely out of pocket for six months they find new own officers to use. A few came back but not many. So, my immediate goal is to rebuild my referral partner base with the right business partners as well as reconnecting with all of the borrowers that I've helped in the past.
What’s your favorite thing about being in this industry?
The favorite thing about this business is that it’s a double-edged sword. This business is a very rewarding business. You get to help families get out of their apartments and duplexes and into their own home with a backyard for their kids. You also get to help those that are doing this for the last time and retiring. That's extremely rewarding but it can be very stressful as well because you're guiding them through one of the biggest decisions they'll ever make.
What’s one thing you want to tackle this year, personally and professionally?
A personal and professional goal of mine this year is to continue working hard in rehab and continue to see improvement and grow my new non-profit, Next Step Neurological Support Network. With my new non-profit, which was set up in February of this year we want to help families that have had a neurological event like mine with medical expenses such as copays, parking fees, food, wheelchairs, getting the house ready for the wheelchairs and walkers, etc.
Dan Gilbert with Rocket was so inspirational to me. I may not be able to build a hospital like he's doing, but I can help with a co-pay, therapy, food or by putting bars in someone's shower so they have something to hold on to. I can do my part to help someone during a very difficult time. We now donate 15% of our mortgage revenue to my non-profit to help fund it.
What is something you are incredibly proud of within your business?
I'm extremely proud of the fact that past clients of mine that I wrote loans for 10 and 15 years ago still call me when they need a mortgage loan. And the fact that after a massive stroke in 2021, I'm still standing and I'm still in this business and I still love what I do.
To have a lending partner like Rocket is priceless. I can't imagine where I'd be, both personally and professionally without Rocket. You make my life so much easier when I need things to be easier in my life. [I] LOVE my team at Rocket, and I’m hoping to one day make the trip to meet them all – especially my AE Mariam (and Dan Gilbert?).
Rent Regulation in the U.S. (Part 1): Here’s what we did in an attempt to do X, yet Y happened.
Economists notoriously tend to disagree on policy prescriptions and how best to address economic problems. But there is one topic on which economists surprisingly find consensus – the ineffectiveness of rent regulation in the U.S.
Despite its long-sustained wide appeal, study after study has shown that over time, rent regulation ultimately falls short of achieving its goals and even creates new problems.
Earlier this year, the National Multifamily Housing Council released a report on recent impacts of rent regulation policies in the U.S. Their findings reaffirmed those of previous reviews, such as rent regulation’s resulting reduction in housing supply and significant fiscal costs that can offset potential benefits.
However, the report had some additional findings:
- Rent regulations lower the value of both regulated and nearby unregulated rental properties, consequently decreasing local real estate tax revenue.
- Rent regulations speed up the reduction of rental units from the housing supply.
- Long-term rental housing production may decline due to future rent regulation considerations in investment valuations as a result of new construction exemptions from rent regulations.
- Rent regulation impedes mobility, creating barriers for new renters and chiefly benefiting higher-income households as opposed to low-income households.
- Some research suggests that white residents receive the majority of the benefits of rent regulation, as they are more likely to occupy rent-regulated units than minority residents.
Source: National Apartment Association
Source: National Apartment Association
So, if rent regulations are so counterproductive, why did we ever seek to implement these policies in the first place?
As it turns out, rent control policies often emerge during times of crisis. It first gained prominence during World War I, as cities faced severe housing shortages and skyrocketing rents. To stabilize the market and protect tenants, the government introduced temporary rent controls. These controls resurfaced during World War II, addressing inflation and housing needs for returning veterans.
Post-war periods saw a relaxation of these controls, but the affordability crisis persisted. In the 1970’s, New York City, grappling with housing shortages and rising homelessness, reintroduced rent stabilization laws. These laws aimed to balance tenant protections with fair returns for landlords, setting a precedent for other cities like San Francisco and Los Angeles.
More recently, the housing affordability crisis in many urban areas has reignited interest in rent control. States like California and Oregon have passed new laws to extend rent control protections, reflecting ongoing concerns about housing stability and equity.
Given recent world events and ongoing concerns about housing affordability, tenant protection and social equality, the persisting popularity of rent regulations is not surprising. However, it is important to acknowledge the unintended consequences rent regulations have been shown to cause and thus crucial to explore alternative solutions to address these pressing issues.
Next week, we’ll explore various alternative approaches to rent regulations. These solutions aim to address the same goals as rent regulation but with different strategies that might offer more sustainable and equitable outcomes.
Thank you to all the partners and real estate agents who joined us in Detroit last week for our latest All Access!
Want to see what Rocket Pro TPO is all about? Talk to your Account Executive about attending an upcoming All Access event!
- Small Business Optimism Index For June
- Jerome Powell Testimony To Congress
- Jobless Claims Come In Below Expectations
- Consumer Price Index Falls To 3.0%
Jim, Stephanie and Mike C battled for puzzle supremacy last week, with each completing last week’s in less than a minute. Mike C’s time of 30 seconds bested Jim’s 49- and Stephanie’s 58-second times.
This week’s puzzle gets 2 Rockets out of 5.
Good luck!