The National Observer: A Key Factor Preventing Many Homes From Hitting The Market

Welcome to The National Observer, a roundup of top business news and actionable insights from across The Business Journals. We'll take a look at how record-breaking new supply is affecting apartment rent, an antitrust lawsuit aimed at breaking up Live Nation and Ticketmaster, and Delta's reconfigured regional jets (including some upscale touches). But we'll start with a look at how consumer expectations around interest rates affect housing market liquidity.

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The 'lock-in' effect is hitting homeowners

Americans are getting more pessimistic about the future of mortgage rates, possibly warding off prospective sellers from the market, reports Andy Medici of The Business Journals.

SURVEY SAYS: Americans expect mortgage rates to rise from today's level at just under 7% to 8.7% a year from now and 9.7% in three years, according to the Federal Reserve Bank of New York’s SCE Housing Survey.

WHY IT MATTERS: While consumer expectations don't directly affect the Fed's rate-setting decisions, homeowners who locked in interest rates at much lower levels are already more reticent to sell, and that entrenchment may grow worse if they don't expect the market to get better soon. The perception may also draw more buyers to the market, looking to settle in at today's interest rates rather than what they expect down the line, said Marty Green, a principal at law firm Polunsky Beitel Green. That could further tilt the supply-demand equation.

IMPACT: Recent data from Redfin Corp. shows housing supply is, indeed, still limited. While new listings in cities Redfin serves are up 10% over 2023, they are still far below 2022 and 2021. That has pushed the median sale price for new listings nearly 6% above what it was at the same time last year. 

FULL STORY: The 'lock-in' effect is hitting homebuyers. It may get worse.

Some apartment renters see rent relief — but not everyone

The national rental-housing market has continued to cool as more supply comes online, though results vary depending on region and type of unit, reports Ashley Fahey of The Business Journal.

DATA DIVING: Asking rents declined across all markets by 0.7% in April — though that and the preceding eight months of consecutive declines have only brought the market $33 off the peak national median rent in August 2022, according to data from Realtor.com. It's also still $316 higher (22.5%) than the same time in 2019.

ZOOMING IN: Some Southern markets have experienced a significantly larger decline, however. The San Antonio, Austin and Nashville areas saw the most cooling in the past year, sliding 8.1%, 8.3% and 8.4%, respectively. Sun Belt markets especially have seen an unprecedented level of new construction delivering in recent quarters, driving up supply in the region.

MIDWESTERN MARKET: Indianapolis, Milwaukee and Minneapolis all bucked the downward trend, hitting record highs in April. Danielle Hale, chief economist at Realtor.com, said while the Midwest has seen some buildup in supply in recent years, it hasn't occurred there as much as it has in the South. Rent in that region remains relatively affordable, which makes the units more attractive to tenants.

FULL STORY: Rental market continues to cool as record amount of new supply delivers

DOJ sues to break up Live Nation, Ticketmaster

The U.S. Justice Department filed a lawsuit Thursday aiming to break up Live Nation Entertainment Inc. and its wholly owned subsidiary Ticketmaster LLC, reports Ben Miller for L.A. Business First.

WHY IT MATTERS: The Justice Department says it wants to restore competition in the live concert ticket industry and lower ticket prices for concert-goers. The complaint also alleges Live Nation’s conduct “has not only harmed fans in the form of more and higher fees, but also undermines innovation.”

THE RESPONSE: Live Nation and Ticketmaster dispute the Justice Department’s stance. “It blames Live Nation and Ticketmaster for high service charges, but ignores that Ticketmaster retains only a modest portion of those fees,” Live Nation said in a statement. “It is also absurd to claim that Live Nation and Ticketmaster are wielding monopoly power.”

BACKGROUND: Beverly Hills, California-based Live Nation merged with Ticketmaster in 2010 and since then has faced a barrage of complaints, escalating in November 2022 with a mishandling of tickets for Taylor Swift’s “Eras” tour.

FULL STORY: Justice Department sues to break up Live Nation and Ticketmaster

Delta unveiling new features for regional jets

Delta Air Lines Inc. is planning to introduce a newly configured regional jet that includes a walk-up snack bar in first class and fewer seats, reports Dirk DeYoung of the Minneapolis / St. Paul Business Journal.

FEATURES: The reduced capacity provides more room for new features, including three luggage closets between first class and economy, reducing the need to require passengers to check bags at the gate.

SCOPE CLAUSE: There's another business reason Delta is likely reconfiguring. Airlines have agreements with pilot unions known as a "scope clause" that limits the number of flights that can be flown by regional jets, which are usually flown by lower-paid pilots, according to The Points Guy website. That clause does not apply to regional jets with 50 seats or less, however.

FULL STORY: Delta's newest regional jets: Fewer seats, more storage and a snack bar