Rents – a lawsuit against Texas-based company RealPage is putting increased attention on how algorithms influence the rental market. In this lawsuit, RealPage is accused of facilitating a cartel between major property manager which results in higher prices for renters and higher profits for landlords. In 40 markets in the US RealPage controls anywhere from 30-60% of the multifamily market, and the company makes a big deal about customers sticking to the software’s recommended pricing. It is alleged that the company kicked customers off the platform for deviating. One economist argues that the company owners might not be aware of the collusion and therefore might not satisfy the traditional definition of a cartel but the impact on the market is the same. Technology is changing faster than our legislation, regulation and our understanding of economic concepts.
Mortgage Rates – improved marginally this week as the price of Mortgaged Backed Securities improved slightly. Rates are up by approximately 0.25% from this time last year.
Inflation – the Consumer Price Index showed that overall inflation rose 0.3% from the month and is up 3.4% year over year (this time last year was a low inflation number). The core rate, which strips out food and energy, is down 0.1% to 3.9% year over year. Rents are still showing a 6.5% year over year increase, that number is expected to decline.
The Producer Price Index, which measures wholesale or producer inflation, fell 0.1% in December and is up only 1% year over year. The Core rate is down to 1.8% year over year.
Home Values – Core Logic reported that home values rose 0.2% in November and are up 5.2% year over year. The November reading was an all-time high for home prices. Core Logic is predicting a slight decline in values next month but a gain of 2.5% over the following 12 months. Core Logic has historically been conservative in their forecast. Based on their numbers 2023 is on pace for 7% appreciation.
Mortgage Applications to purchase homes increased 6% last week and down 16% year over year. Refinance apps rose 19% last week and are up 30% from this time last year.