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$208K Net Worth Increase for Over 60% of the US

Plus, February 2024 Hottest Housing Markets, US manufacturing is growing again and 6 more RE insights

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A Quote

“The only true test of intelligence is if you get what you want out of life.”

― Naval Ravikant

Today’s Rates

Real Estate Trends

$208K Net Worth Increase for Over 60% of the US link

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  • Homeowners who've had their homes for the past four years have seen their net worth increase by $208K due to a surge in home prices. This unprecedented rise in home equity is bolstering housing demand across all buyer segments, despite the affordability challenges.

  • The total home equity for homeowners has reached a staggering $31.8 trillion, doubling from the previous peak in 2006. This financial strength is driving consumer spending and investment, supporting the economy and making homeownership more accessible through generational wealth transfer.

  • Accumulated home equity is being used differently across stages of homeownership, from purchasing move-up homes to assisting first-time buyers and financing home renovations. This trend underscores the critical role of home equity in sustaining housing market dynamics and consumer economic stability.

Open Construction Jobs Rising  link

  • Job openings in the U.S. economy have trended lower over the past year due to tightened monetary policy, marking a shift toward a cooling economy. This trend is seen as a positive signal for future inflation readings, with total job openings slightly increasing to 8.76 million in February from 9.85 million a year ago.

  • Open construction jobs have bucked the general trend by rising from 425,000 in January to 441,000 in February, pointing to an ongoing skilled labor shortage in the sector. This increase from 409,000 a year ago during a weaker period of home construction suggests persistent demand for skilled construction workers.

  • The construction sector is experiencing labor market churn, with layoff rates rising to 2.6% from 2.1% a year ago, and hiring rates increasing to 4.9% in February from 4.7% a year prior. These changes underscore the challenges of recruiting, training, and retaining skilled labor in the face of monetary policy adjustments and economic cooling.

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Rent prices across the U.S. grew in March, with one exception link

  • U.S. rent prices increased in March for the first time in six months. The monthly cost for a one-bedroom apartment rose to $1,487, marking a 0.3% increase from February, while two-bedroom apartments saw a 0.5% increase to $1,847.

  • Arizona experienced rent decreases in all its major metro areas. Statewide, the median price for one-bedroom apartments dropped to $1,311 in March, about a 4% decline from the previous year, showcasing the impact of increasing supply on rental prices.

  • Supply and demand dynamics are fundamentally affecting rent prices, with significant increases in areas like New York City, where one-bedroom apartments are up 25% from last year. In contrast, an influx of new units in Arizona is expected to keep prices low, highlighting the role of supply in stabilizing or reducing rent costs.

Macro Trends

2023 State-Level GDP Data link

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  • Real GDP increased in 49 states and the District of Columbia in 2023, with Delaware being the only state to experience an economic decline. North Dakota led the growth with a 5.9% increase, while Delaware faced a 1.2% contraction.

  • The national real GDP growth rate accelerated to 2.5% in 2023, up from 1.9% in 2022. Key sectors driving this growth included retail trade, professional, scientific, and technical services, and health care and social assistance.

  • The Southwest region (Arizona, New Mexico, Oklahoma, Texas) saw the highest regional GDP growth at 5.1%. In contrast, the Great Lakes region experienced the lowest growth rate at 1.2%. The mining industry significantly contributed to the GDP increases in states like North Dakota, Texas, and Wyoming.

US manufacturing is growing again link

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  • US factory activity expanded in March for the first time since September 2022, driven by a significant increase in production and demand. The ISM manufacturing gauge rose to 50.3, indicating the end of a 16-month contraction period.

  • Production surged with the largest gain since mid-2020, marking the strongest output growth since June 2022. New orders also entered expansion territory, contributing to the positive momentum in manufacturing.

  • Input costs are on the rise, with the prices paid gauge hitting the highest level since July 2022. This increase suggests persistent inflationary pressures, even as the manufacturing sector shows signs of recovery.

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Off Topic

The most dangerous countries: Chart

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Something I found Interesting

Consumer Confidence Remains Stable Despite Concerns About Future  link

  • In March, the Consumer Confidence Index remained stable at 104.7, the lowest since November 2023, showing a balance between optimism for current conditions and concerns for the future, mainly due to persistent inflation affecting food and gas prices.

  • The Present Situation Index saw an increase to 151.0, while the Expectation Situation Index dropped to 73.8, historically indicating a potential recession within a year if below 80.

  • There was a slight decline in consumers rating business conditions as "good" to 19.5%, but those viewing them as "bad" also decreased to 17.2%, showing a mixed perception of the business environment.

  • Consumers have a more positive view of the labor market, with an increase in those finding jobs "plentiful" and a decrease in those finding them "hard to get", reflecting confidence in employment opportunities.

  • Pessimism grew regarding the short-term economic outlook, with an increase in consumers expecting business conditions to deteriorate over the next six months.

  • Plans to purchase homes rose to 4.9% in March, with interest in existing homes climbing to 2%, indicating a slight shift in consumer intentions towards the housing market despite economic uncertainties.

Pro Member Only Content Below

This Market Grew Renter Households at the Nation’s Fastest Rate 

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  • Wilmington leads the nation with a 25.2% increase in renter households from 2020 to 2023. This remarkable growth is the highest among all U.S. cities, showcasing the area's booming rental market.

  • The Carolinas are a hotspot for renter household growth, with several markets ranking top nationally. Six metros from North and South Carolina find themselves within the top quartile for this metric, indicating a trend tied closely to supply and absorption rates.

  • Apartment absorption in the Carolinas has been significant, reflecting a strong demand for rental housing. The availability of more supply in these areas naturally leads to higher absorption, pointing to a healthy and expanding rental market in the region.

  • link

February 2024 Hottest Housing Markets 

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The U.S. hits a record high with 550 "million-dollar" cities 

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That's all, folks.

Cheers,

Vidit

P.S - Read past newsletters here

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