Economic update for the week ending July 7, 2018

Crude Oil  $73.92  -    Gold  $1,255.90 -    Silver  $16.07   -    EUR/USD  $1.18

Stocks snap a three week losing streak and end the week higher -  A better than expected June jobs report, and expectations of a strong second quarter earnings reporting season helped stocks shrug off fears of a global trade war. The Dow Jones Industrial Average closed the week at 24,456.58, up from 24,271.41 last week. It is down 1.1% year to date. The S&P 500 closed the week at 2,759.83, up from 2,718.37. It’s up 3.2% year to date. The NASDAQ closed the week at 7,688.39, up from 7,510.30 last week. It’s up 11.4% year to date.


Treasury Bond Yields drop again this week -  The 10 year treasury bond closed the week yielding 2.78%, down from 2.85% last week. The 30 year Treasury bond yield ended the week at 2.94%, down from 2.98% last week. We watch bond rates because mortgage rates follow bond rates.


U.S. economy adds 213,000 new jobs in June -  Unemployment rate ticks up to 4%. The Department of Labor Statistics reported that U.S. employers added 213,000 new jobs in June. Experts had predicted 194,000 new jobs, so this was a very positive report. The unemployment rate increased to 4% as more workers entered the workforce. Average hourly wages were just 2.7% above last June’s level. This was below the 2.8% expected.


Mortgage Rates down this week -  The July 5, 2018 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.52%,  down from 4.55%  last week. The 15 year fixed was 3.99%, down from 4.04% last week. The 5 year ARM was 3.74% down from 3.87% last week.


Don't rent out your home on Airbnb before you read this -  You'd be hard pressed these days to find any homeowners who haven't considered renting out their home on Airbnb or a similar site. It’s certainly tempting to make extra cash on a room that's just sitting empty. But listing your home on Airbnb isn't quite as easy as snapping some photos and posting them online. Many cities across the globe have regulated the short-term lodging service in order to keep guests and homeowners safe and honest. Navigating these rules might seem daunting, but I broke down the basics that first-timers need to know.

  1. Follow hosting etiquette -  Airbnb has a list of hosting standards that cover everything from communication to cleanliness. Think you can just offer up a bed and be done with it? Nope. You need to make sure you've provided essential items such as toilet paper, soap, and linens for each booked guest. And even though your plans might change, you'll want to avoid canceling on your guests at any time. While these aren’t "rules" in the sense that they’re enforceable or come with penalties for violating them, they will have a major impact on the success of your hosting endeavor.
  2. Safety is your responsibility -  If you're a U.S. based host, you'll also want to take a close look at Airbnb's guide to responsible hosting in the United States. You'll need to do your due diligence to prepare guests for emergency situations ( providing a first-aid kit and a list of emergency numbers that includes the nearest hospital), and stay up to code when it comes to smoke and carbon monoxide detectors.
  3.   Permits might be required -  This hosting thing doesn't come without its costs to you. That's only fair, right? As Airbnb notes, most cities require hosts to apply (and usually pay a fee) for permits or registrations in order to legally rent out their home, even if it's just for a few days. Don't even think about skirting this. Ensure you look up any permitting, zoning, safety, and health regulations that may apply.
  4. There's a limit to how long you can host -  Have a guesthouse or second property that you want to make a permanent Airbnb offering? Before dreaming of swimming in a pond of money, know this. There are usually rules on how long you can rent out your house. You should verify the following information:
  1. HOA and co-op rules might apply -  Like cities, homeowners associations and co-ops take a different approach to regulating short-term rentals. Some places might have no rules at all, while others can ban subleasing altogether. Even if your community doesn't have specific rules regarding short-term rentals, there are often clauses regarding following local regulations and zoning laws. That means hosts can be on the hook, not only with the city but also with their HOA, if they don't follow the law.
  2. Rental income has to be reported -  Any profits you earn from renting out your home are subject to income tax. Before tax time rolls around, make sure you do your homework about how to report rental income. One big thing to know. If you're a U.S. citizen, you're subject to income tax even if your property is located outside the U.S. If you're from outside the U.S. but have a U.S.-based property? Well, you'll pay taxes on that, too.
  3. But deductions are available -  Anything you buy for your rental listing is deductible. Even the hosting fees you pay to Airbnb. If you put together a bundle of soaps and shampoos for guests, set out coffee and juice in the morning, or buy extra linens, all of those things can be written off your taxes. You can even deduct a portion of the depreciation of your home, which is based on the number of days each year the property is rented out and whether or not it’s the whole home or just a room or two. You can also write off any necessary repairs to keep your rental up to snuff. The key is documenting everything. It’s important to track everything and keep all of your receipts, even if it’s just in a spreadsheet or something like that. Since tax law is always changing, consult a professional to make sure you're taking advantage of all possible tax breaks, and not breaking the law.