Insider Today: Homebuyers’ last hope

July 19, 2023

Hiya! Are you starting your day with a cold plunge? That's apparently what Reddit cofounder Alexis Ohanian does each day, according to the routine he shared. Maybe he's even doing it as you read this?

In other news, we've got a promising update for hopeful homebuyers.

We're also covering:

Microsoft's latest layoffs hit more than 1,000 employees.
What Wall Street is looking for in Tesla's second-quarter earnings.
The companies that business students most want to work for.

But first, let's get to building.

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THE BIG STORY

Help is on the way for homebuyers

Arantza Pena Popo/Insider

If you build it, they will come.

That might be the housing market's motto for the foreseeable future, as homebuilders represent a bright spot in an otherwise bleak landscape for hopeful homeowners.

US construction on new homes rose 22% in May. The month also had the highest number of new foundations laid since April 2022. The uptick in building, along with surveys showing builders are feeling bullish, indicates new homes could help ease some of the issues facing the current housing market, James Rodriguez reports.

When discussing houses, talk of mortgage rates — where 7% has become the "new normal" — usually isn't far behind. But new homes could solve some of those pain points.

One problem is that most homeowners aren't eager to sell knowing they'll have to give up their much-lower rate. As a result, supply has dried up, creating a housing-market "ice age," per James' previous reporting.

New homes, obviously, don't have that issue.

On the flip side, high rates also deter buyers. But here, too, new homes have a solution. Some builders are offering to pay for a buyer's rate buydown, which amounts to fronting cash to reduce the rate of one's mortgage over the long term.

Still, as James points out, new homes aren't a silver bullet for all the housing-market woes. The current pace of production won't fix things overnight.

How aggressively homebuilders decide to ramp up operations will be interesting to watch.

The market's limited supply represents an opportunity for new construction to fill the gap. But for some builders, the scars from the housing bubble that preceded the Great Recession haven't faded.

Unfortunately, homebuilders will be flying blind for a bit. With the start of school just around the corner, housing demand is bound to decrease at least slightly as buyers with families won't look to move during the school year.

That leaves roughly seven months, about the average time it takes to build a home, for builders to get their houses in order (pun intended) in time for the unofficial start of the spring season for real estate: the Super Bowl.

READ ON

TOP READS

Meta promotions, AWS reorg, & hot real estate

Charles Platiau/Reuters

Meta tells managers promotions will be much harder to get. For years, the company promoted managers based on the size of the team they built. But amid cost-cutting efforts (i.e., less hiring) that won't be as big of a factor anymore. A Meta employee said this meant manager careers would instead be defined by "their ability to navigate politics."
SEC Chair Gary Gensler has some thoughts on AI. Gensler acknowledged how transformational the tech was but also warned it could promote a herd mentality that might trigger a financial crisis.
Leaked email: Amazon Web Services is going through a reorg. A new "AWS Compute Services" team was created, according to an internal email. Along with the new team, top executives were also shuffled around.
The companies where undergrads want to work. Computer-science students are keen to work for companies like Google, NASA, and Spotify. Meanwhile, engineering students want to work for SpaceX, Raytheon, and Boeing. And business students want to work for Apple, the FBI, and Nike.
Microsoft cuts 1,000 employees. This round of layoffs is beyond the 10,000 jobs it already slashed earlier this year. Customer service and sales were the most heavily affected, according to people familiar with the changes. Some employees have been criticizing company leadership for not sharing many details about the cuts.
The 19 hottest metros for real estate. Plus, the 20 areas slowing down the most. Boston is leading the pack for real-estate demand along with cities including Columbus, Ohio, and Bridgeport, Connecticut. Meanwhile, cities such as Austin that boomed earlier in the coronavirus pandemic are seeing a major drop in interest.
Roblox's virtual back-to-school-shopping experience. The metaverse gaming company partnered with Target's delivery company Shipt to create a racing game. Insider's Grace Mayer writes that the new experience felt like gig work with a "Fast and Furious" mindset.

BEFORE THE OPENING BELL

Tesla, no recession, & Goldman Sachs

Justin Sullivan/Getty Images

What to expect ahead of Tesla reporting earnings. The EV maker is set to report today after the market close. Here's what Wall Street analysts think we'll see.
So, about that impending recession… For all the doom-and-gloom talk on Wall Street, the US economy seems to be in pretty good shape. So what happened? From a robust labor market to debt levels not getting too high, here are 10 reasons a recession hasn't materialized.
A "culture of bullying" at Goldman Sachs is said to have led to people crying in meetings. A former London exec filed a complaint alleging Goldman's culture led him to have a mental breakdown, according to a media report. A Goldman representative said the allegations were "completely without merit."

WHAT ELSE IS GOING ON

Trump, Google, weather apps, & North Korea

Brandon Bell/Getty Images

Donald Trump could be indicted in the DOJ's January 6 probe as soon as Thursday, his former lawyer told CNN.
Google lists scam numbers for airlines. A Twitter user (who was nearly scammed) found at least six airlines with suspicious telephone numbers listed on Google.
Weather-app addiction. They're not reliable. But we can't get enough of them.
A US soldier was apparently seen laughing while running into North Korea. He was believed to be in trouble with the US military and is now thought to be detained in North Korea.