Rocket Fuel Newsletter – 07/22/2024

The Paris Summer Olympics kick off with the opening ceremonies on Friday, July 26, as the United States looks to improve on their count from the 2020 Games of 113 medals. In addition to the medal count competition, this year’s Games will include five new events: skateboarding, sport climbing, surfing, 3x3 basketball and breakdancing.

In this edition: New homes have been built, the future of remodeling, a record Prime Day and rent regulation alternatives!

Click here for all info on the 2024 Summer Olympic Games!

Fuel Up! 🚀

Mixed Results From Residential Construction Data

New residential construction metrics continued to give mixed messages, according to data released by the U.S. Census Bureau for June 2024. Housing completions jumped 10% from May, as housing completions were up over 10% from May and up 15.5% from June 2023.

Conversely, permits and starts continued their 2.5-year slide from highs at the end of 2021. This suggests that while completions continue to help bolster our overall housing supply, the ongoing dip in both permits and starts will inevitably plateau construction completions and any positive impact it has on supply.

Spending On Remodeling Projected To Increase Into 2025

According to a Harvard University study, home remodeling spending is expected to pick back up in 2025 after a steady decrease following the pandemic surge. This uptick in spending is more of a normalization than a surge, as home supply and material costs show signs of improvements.

With rates projected to be lower next year, the projected increase in spending will be helpful to keep in mind for clients that may benefit from additional financing.

Check out the full article here.

Record Prime Day

Early indications are that consumers brought their wallets and coin purses to Amazon’s annual Prime Day event. The industry giant estimates that buyers spent $7.2B on the first day of sales, Tuesday, July 16, and a whopping $14.2B total throughout the 2-day event. In signs of ongoing consumer trends, shopping on phones increased 18% and made up close to 50% off all spending.

What else did Amazon report immediately after Prime Day?

Kelli Ringler, Front Porch Mortgage, LLC

Tell us about the beginning of your career. What got you started?

I have been in the business since 2005 when I became a mom. The mortgage industry looked to be a way to help people make their dreams come true and provide a flexible schedule to be there for my daughter. I never looked back and have loved every minute of it!

Tell us about some of the biggest lessons you’ve learned in your tenure.

Be honest and straight forward with all parties. Communication is key! When there is a problem don't hide it come to the client and any other related parties with some solutions! Be a student of your craft! The industry changes all the time and keeping up with the latest trends is so important!

What is one thing you wish you’d known when you got started?

Don’t be afraid to ask for the business with people you know.

What are some of your goals?

My biggest goal in my career was to start my own broker shop and I did that back in 2018. I want to continue to grow my brand and have a successful legacy.

What’s your favorite thing about being in this industry?

I love helping people maximize their value and get into the home of their dreams; whether that be their first home or helping them find a way to move up into a new home.

What’s one thing you want to tackle this year, personally and professionally?

Professionally my goal is to find different avenues of business to not feel a slave to the rates. Personally, goals are surrounded around our hobby farm we bought 2 years ago and making that what we want it to be.

What is something you are incredibly proud of within your business?

Our business is built on treating everyone as they are your neighbor, being there to answer all the questions, day and night, and making them feel comfortable in the home buying process.

What is your “why”?

My why is my family, 100%.

Alternatives To Rent Regulation

Last week we talked about some of the negative side effects of rent control. While undoubtedly well-intentioned, rent control often has adverse effects such as:

Reduced value of property
Reduced housing supply
Reduced investment in neighborhoods
Decreased local real estate tax revenue
Disproportionate advantage to non-minority residents

So what can be done to make housing more affordable for those in need?

More Low-Income Housing

According to a recent statement from National Association of REALTORS® President Keving Sears, the most obvious answer is to increase housing supply – easier said than done.

Right now, there are more low-income households than there are available low-income housing options. When demand outweighs supply, prices increase. So, to bring down price, we must increase supply.

Unfortunately, there are currently many zoning and building regulations that restrict the size and location of new residential builds. Removing those restrictions would increase available housing and decrease the cost of renting.

More Income

Another alternative to rent control would be to attack the problem from the other side of the equation. Rent regulation seeks to reduce housing costs for low-income families, but what if rather than reduce expenses, we increase income?

One example that is frequently cited in rent control debates is the city of Cambridge, Massachusetts. Cambridge banned rent regulation in 1995, resulting in an increase in property values and tax revenue. Nearly 30 years later, in 2023, Cambridge started a basic income program, guaranteeing qualified households $500 per month in income. Implementing similar policies elsewhere could guarantee that help goes to those who need it while being funded by the increase in local tax revenue.

More Tax Exemptions

Speaking of taxes, another factor that could be restricting rental inventory is the disproportionate amount of taxes renter-occupied property owners pay compared to owner-occupied property owners.

In many places throughout the U.S., homeowners benefit from homestead tax exemptions, reducing the assessed value of their property. When rental property owners are not given the same benefit, the additional tax costs are likely to be passed on to the renters. A publication from the National Multi Housing Council illustrates how low-income households pay a disproportionate amount of property taxes compared to all other income tiers.

Extending the same tax exemptions to renter-occupied properties could both reduce rent and incentivize more property owners to rent out their properties, simultaneously increasing housing supply and decreasing costs.

More Public Transportation

Finally, transportation costs can be a significant hindrance to low-income households: Residents are forced to either live where they work – which can be very expensive – or live in a more affordable location, but then pay for transportation. Increased investment in public transportation would allow renters to live in presumably cheaper areas further from city centers while still affording them the benefits downtown has to offer. Again – much easier said than done.

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Rent regulation would be hard to let go of. It provides immediate tangible relief to some, but in the long run has proven to be detrimental to the availability of affordable housing for those who need it. Reducing building regulations, increasing income, equalizing tax incentives, and improving the availability of public transportation attempt to address the source of the affordable housing problem rather than treating the symptoms.

Stay tuned next week for the final part of our three-part series on rent regulations!

The Rocket Pro TPO team was down in New Orleans for the Ultimate Mortgage Expo from July 10 – 11. Thanks to everyone who stopped by, including our friends from My Community Mortgage!

Last week’s puzzle may have had the fastest times on record! Over half of all solvers finished in less than a minute, led by Ali C. and Chip’s incredible times of 9 seconds each. Overall, the average solve time was just over a minute. Great work!

This week’s puzzle gets 2 Rockets out of 5.

Click here to solve!