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Rates & Financing

> Mortgage Rates as of 11/20/2024

Property Management

> Property Reserves: Ensuring Financial Preparedness

Owning a property involves unexpected expenses, from longer-than-expected vacancies to replacing essential systems like furnaces, water heaters, or roofs. You might even face the cost of remediating mold from a small leak. To minimize stress in these situations, we recommend establishing a financial reserve.

The question then becomes, "How much should I keep in reserve?" Too much and it can reduce your returns because you're not reinvesting that money; too little and you might find yourself caught off guard. While it’s impossible to predict every potential repair, you can estimate costs based on the property's age, upcoming vacancies, roof condition, and more.

A well-planned budget for expenses, repairs, and capital improvements will help quantify the amount needed. We typically recommend maintaining a reserve equivalent to six months of expenses. This should cover repairs, partial mortgage payments during vacancies, and regular costs like landscaping and snow removal. Generally, this reserve will amount to 1-2% of the property's value, excluding major repairs.

If you need help budgeting and calculating your reserve, don't hesitate to contact us today!

Headlines & Insights

Featured Story

> Builders Shift to Condos and Townhomes Amid Affordability Challenges

In response to America’s ongoing housing shortage and affordability crisis, builders are increasing their focus on attached single-family homes like condos and townhomes, while construction of detached homes continues to decline.

Main takeaways:

• Pivot to higher-density housing: Builders are addressing land cost challenges by constructing more townhomes and condos, with starts for attached homes rising 3.2% in 2023 and new condo starts increasing 8.1%.

• Regional construction trends: Cities like Pittsburgh, Indianapolis, Dallas, and Las Vegas are issuing significantly more permits compared to pre-pandemic levels, while Salt Lake City and Denver have seen a sharp decline in single-family permits.

• Policy solutions for supply: Experts suggest zoning reforms, reducing parking requirements, and accelerating permit approvals could unlock millions of housing units and help alleviate the 4.5 million home shortage in the U.S.

More News and Reports

Utah Braces for Winter Homelessness Surge: As housing costs skyrocket in Utah, making homeownership increasingly unaffordable, state officials are ramping up efforts to tackle homelessness, including plans to build 35,000 starter homes over the next four years and enhancing services for those already affected.

Expanding Rental Housing Support: The FHFA has increased the multifamily loan purchase cap for Fannie Mae and Freddie Mac to $73 billion each for 2025, totaling $146 billion. This boost aims to enhance liquidity and affordability in rental housing, particularly in workforce housing, which remains exempt from these limits.

U.S. Treasury Yields Rise Amid Geopolitical Tensions and Weak Housing Data: As geopolitical tensions escalate and new economic data emerges, U.S. Treasury yields climbed on Wednesday. The 10-year yield increased by nearly 5 basis points due to growing concerns over the U.S.-Russia conflict and disappointing U.S. housing market indicators. Investors are closely monitoring further economic reports and comments from Federal Reserve officials for insights into future monetary policy directions.

U.S. Home Prices Edge Up: In October, U.S. home prices continued a consistent growth trend, rising 0.5% month-over-month and marking a year of gains between 0.2% and 0.7% each month. Annually, prices increased by 5.9%, the smallest rise since last December, with eight major metros seeing price declines.

Housing Crunch Hits Hard: Housing affordability continues to plummet, particularly in Los Angeles, Oxnard, San Diego, San Jose, and New York City, where less than 30% of households can afford the median-priced home. High mortgage rates and prices challenge many potential buyers, with required incomes for home purchases far exceeding average earnings in these areas.

Fed Rate Cut in December Unlikely, Says Nomura: Nomura analysts anticipate the Federal Reserve will not cut interest rates in its December meeting, diverging from prior expectations. They predict only two rate cuts in 2025 due to potential inflation pressures from tariffs. This reassessment could impact investment strategies across various sectors.

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