Warren Buffett's $250M Antitrust Resolution 🏘️

Today’s top stories…

• Warren Buffett's real estate company settles antitrust lawsuit for a whopping $250 million

• Predictions for 2024: Affordability challenges persist, but experts don't foresee a crash

• A Boeing 727 gets a second life as a lavish Airbnb in England

• 💰 Deal of the Day!: 2 bd | 2 ba | Maggie Valley, NC

Today’s mortgage rate (30 Yr. Fixed): 7.45%

Buffett's Real Estate Brokerage Pays Up: $250 Million Antitrust Settlement

HomeServices of America, Warren Buffett's real estate brokerage, just agreed to pay a whopping $250 million to settle antitrust allegations. Here's what you need to know:

• This is the highest settlement amount any brokerage has paid in the landmark case against the real estate industry

• HomeServices was accused of keeping fees artificially high, but maintains confidence in its business practices

• The settlement aims to protect HomeServices' agents, employees, and franchisees from related lawsuits

It's part of a larger trend: the National Association of Realtors (NAR) also settled for $418 million over four years

But wait, there's more! A recent Missouri jury verdict ordered damages of at least $1.8 billion from NAR, HomeServices, and another brokerage for inflated agent fees.

What does this mean for you as an investor?

• Potential changes to the way homes are sold, with sellers' agents no longer required to give commission to buyers' agents

• Possible savings on realtor fees when buying or selling properties

• Increased scrutiny on industry practices, as the Department of Justice reopens its investigation into NAR

Stay tuned for more updates on how these settlements and investigations could impact your real estate investments.

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To evaluate a potential investment property, start by analyzing the local market conditions, including population growth, job market, and rental demand. Next, calculate the property's potential cash flow by estimating rental income and subtracting expenses such as mortgage payments, taxes, insurance, and maintenance costs. Consider the property's appreciation potential based on historical trends and future development plans in the area. Finally, conduct a thorough inspection of the property to identify any necessary repairs or upgrades that may impact your ROI.

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Navigating Affordability Hurdles

Affordability constraints will likely continue, with high home prices and elevated interest rates persisting through 2024, according to Doug Duncan, chief economist at Fannie Mae. Despite these hurdles, Fannie Mae forecasts an increase in home sales transactions compared to last year. Home price appreciation is expected to slow down, but regional variations will depend on local market supply.

For a housing recovery, experts say we need higher inventories, easing home prices, and cooler mortgage rates (currently at 7.45% for a 30-year fixed). Kuba Jewgieniew, CEO of Realty ONE Group, is optimistic about a better housing market in 2024, with interest rates settling around 6% or lower.

But wait, there's a major shake-up in the industry. The National Association of Realtors (NAR) has agreed to a $418 million settlement in antitrust lawsuits filed by home sellers. New rules will prohibit offers of broker compensation on multiple listing services (MLS) and sellers will no longer be required to pay buyer broker commissions. This could significantly impact first-time homebuyers, FHA, and VA buyers who may struggle to afford their own agent fees.

As for housing inventory in 2024, existing inventory is showing signs of loosening, but a meaningful increase isn't expected until mortgage rates drop to the low 5% range. Home-builder outlook is improving, with the NAHB/Wells Fargo Housing Market Index surpassing a crucial threshold in March. New single-family building permits have increased for 13 consecutive months.

Latest home sales data reveals that existing-home sales jumped 9.5% in February, but remain 3.3% lower than a year ago. New home sales dipped 0.3% compared to January, but outpaced February 2023 sales by 5.9%. Pending home sales rose 1.6% in February, despite mortgage rates approaching 7%.

While affordability challenges persist, experts generally don't expect a housing market crash in 2024. Foreclosures are also not likely to reach pre-pandemic levels this year.

(source)

From Grounded to Groundbreaking: The Boeing 727 Airbnb Experience

British-Australian businessman Johnny Palmer has transformed this 56-year-old aircraft into a one-of-a-kind vacation rental, complete with walnut paneling, gold details, and crystal accents. The jet, dubbed PYTCHAir, was purchased without wings, engines, or a tail, but its luxurious interior has been meticulously restored.

The Airbnb can accommodate at least four guests and starts at around $438 a night with a minimum two-night stay. The sleeping arrangements include a separate bedroom with a king bed, a bunk bed, a pull-out couch, and a few sofas. Two main living spaces provide ample room for lounging, working, or dining, while a fully-equipped kitchen and three bathrooms (one with a shower) ensure comfort and convenience.

PYTCHAir's journey began as a commercial jet for Japan Airlines and Hapag-Lloyd Flug before being converted into a private jet in 1981. After passing through the hands of several ultrawealthy owners, the wingless fuselage ended up in a scrapyard in England, where Palmer acquired it. Transporting the plane to its current location in Bristol required a police escort and temporary motorway closure.

To get the jet Airbnb-ready, Palmer invested tens of thousands of dollars in repairs and upgrades, including new lighting, sound systems, high-speed internet, and a 240-volt electrical system. The aircraft is securely held in place by a structure made from shipping containers, designed to give guests the sensation of flying above the clouds.

While PYTCHAir is already receiving bookings into May and June, Palmer welcomes daytime visitors interested in exploring the unique space. This converted 727 joins the ranks of other repurposed aircraft worldwide, such as the Hotel Costa Verde in Costa Rica, the JumboStay hostel-hotel in Sweden, and various sunken planes serving as man-made diving sites.

As an investor, keep an eye on the growing trend of unconventional vacation rentals like PYTCHAir. With the right property and innovative vision, you could tap into a niche market of travelers seeking one-of-a-kind experiences.

(source)

💰 Deal of the Day!

Price: $399,000

Address: 80 Chalet Pl, Maggie Valley, NC 28751

This Getaway Chalet in Maggie Valley would make an excellent vacation rental due to its prime location near popular attractions like Cataloochee Ski resort, Harrah's Cherokee Casino, and the Appalachian Trail, as well as its charming interior featuring a cozy wood-burning stove and stone fireplace, while the adjacent buildable land and serene setting with multiple porches and a nearby stream provide added value and tranquility for guests seeking a memorable mountain getaway.

Airdna data:

Estimated monthly payment: $2,498/month (if financed)

Estimated monthly revenue: $2,616/month

Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.

Thanks and see you tomorrow!

✍️ Brett