Is the Glass Half Empty or Half Full? 🧪

In today’s edition:

• Optimism for housing remains despite pessimism for the economy
• The path to addressing the housing shortage faces obstacles
• Can iBuying survive this market?

A note from the editor: I am constantly looking at data, reading articles to summarize trends for my colleagues, and taking notes – to the point where I get made fun of for all my notes. So I figured it is time to get this information packaged and published. I look forward to bringing our proprietary insights and unique industry perspective to your inbox on the 1st of each month. I believe that feedback is a gift, so you can write to me at trose@planomatic.com with any comments, critiques, compliments, or ideas for future content. Thanks for reading!

—Tim Rose, Director of PlanOlabs

🎯 What's Stirring

There seem to be two distinct threads emerging in the SFR industry: 1) Short-term challenges (layoffs, pause in acquisitions, waiting for prices to adjust, etc.) and 2) Long-term opportunities (strong rental demand, plenty of capital to deploy, etc).

Some are saying we are at or near the “bottom”, while others are not quite so optimistic:

• Jerome Powell is bracing for a longer inflation fight amid the hiring surge. Unemployment has fallen to its lowest point in 53 years (3.4% in Jan), while the Fed has raised rates at its fastest pace since the 1980s. “We’re not seeing disinflation there yet, and that’s going to take some time. We’re going to need to be patient.” More than a third of Fed officials anticipated lifting the rate above 5.25% this year, which would call for another increase in June.
• Don Mullen explains why he is still all-in on US Housing, citing proven operational effectiveness at scale (no longer the risk it was back in 2008), a severe undersupply of housing, more renters by choice… oh and he also said “iBuyers will probably disappear completely. I’d be surprised if they exist at all in 24 months.”
• Investors purchased 46% fewer homes YoY in Q4 2022, while overall US home sales fell 41%. U.S. home prices are up less than 1% YoY—compared with 15% growth one year ago—and have fallen 11% from their spring 2022 peak.
• The monthly mortgage payment on a typical single-family home is up 58% YoY (or $720). “A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” said NAR Chief Economist Lawrence Yun. Only 18% of metro markets posted double-digit annual price appreciation in Q4 2022, while this number was 46% in the previous quarter.
• The ‘missing middle’ would help the housing shortage and in turn improve affordability, but it often faces local opposition. Housing experts say that introducing new laws that legalize denser options like townhomes, duplexes, and small apartment buildings are key to ending the severe housing shortage.

📊 PlanOlabs Insights

Proprietary insights into the SFR industry from our research and consulting team

A recent study found that using professional photography decreased days on market by almost 11% and increased price / square feet by 10%. See all the details and findings here.

For more PlanOlabs insights, visit our blog.

🔍 I Like Big Data (Releases) And I Cannot Lie

All the relevant data releases from the past month

• The Consumer Price Index increased more than expected: 0.5% in January, after increasing 0.1% in December
• The Small Business Optimism Index remains well below its 49-year average, with job openings and hiring plans standing out as one of the few bright spots for small business owners
• CoreLogic’s Single-Family Rent Index rose by 6.4% year over year in December 2022, compared with the 12.1% gain recorded in December 2021

For the rest of the housing and economic indicators we track, check out the full blog post here.

📰 SFR In The News

Everyone knows this stuff and you should too

• Invitation Homes and AMH report on Q4 2022 and the 2022 fiscal year
• Lessen acquires SMS assist in $2.25B proptech merger
• Home Partners of America appoints Jennifer Deason as new CEO
• OfferPad announces a second round of layoffs since September 2022
• Blackstone’s new "Breit" idea leaves it bruised

The Beaker is a bi-weekly briefing from PlanOmatic on the economy, housing, and the forces shaping both. Have something we should cover? Reply to this email.

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