Housing Market Predictions: Can Unmarried Buyers Help Save the Market?

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The headlines are on the move in real estate and mortgage! Every week new data surprises us with new ways people are getting creative to achieve their homeownership goals! This week we breakdown:

  • More unmarried couples are buying homes together. What to know before you do.
  • Mortgage demand drops to 27-year low as interest rates pull back.
  • Mortgage rate tipping point: Homeowners saw roughly 5% is the magic number to move.
  • Housing market predictions: The Forecast for the next 5 years

The Fed’s Most Important Decision of 2023

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https://youtu.be/ee7ZWQVFn3I

Last week was all about inflation which we talked about. Consumer inflation came in at 3.7% which was higher than projected, and STILL really far away from the Fed’s 2% overall inflation target. Too many people on TV just fan the flames of market optimism, completely void of any recollection of economic history. In the past we’ve seen inflation weaken as an initial sign of progress, only to rear it’s ugly head again, right before deflation finally kicks in and wrecks a bunch of stuff in a lot of sectors of the economy. This is showing those same markers, but ok maybe it’s for different reasons. I agree with that. And Fine, those of you who are asking “why isn’t he talking about PCE?!?!” which is the Fed real marker for whether we’re making a dent in inflation…we’ll it’s still positive too, and until it starts reporting zeros in growth of even some negative numbers…we’re still in a month over month ascending line chart. By the way, I’m willing to bet that Fed members were probably aware of this during their Jackson Hole Symposium meeting recently. Remember a number of them hit the press stating that they’re prepared to raise rates higher if they need too, and then hold them there for longer….maybe its time we start believing what they’re telegraphing.

If anything has a chance of making the Fed pause rate hikes this week it will be softening jobs data. As we’ve been telling you, they want to see 4.5% unemployment rate – which is a combination of increasing numbers of American’s hitting the jobless line at the same time that companies are telegraphing hiring freezes, and making less new jobs available. Look no further than the most recent JOLTS report that was 700,000 LESS JOBS available than the previous month. And don’t even get me started on the hundreds of thousands of combined tech layoffs that have happened this year. Maybe you even forgot about all that because they have drifted off into the furthest recesses of the news headlines and collective attention span. And while weakening unemployment is bad for the economy, it’s actually good for the Fed…which somehow is also good for the economy…but on a much longer timeframe than we’ll probably be comfortable with. September 20 will either be a HUGE day for the Fed or a massive disappointment that forces everyone’s attention on their November meeting. If they need to take more action, I’d honestly like to see them do it now RATHER than whack the economy one more time in November right before the holiday shopping season.

At this point opportunities in the real estate market need to be looked at the MICRO level, meaning YOUR specific scenario and what will help YOU advance your real estate and mortgage goals. Yes, we know that certain market conditions like lower rates, reduced home prices, and more inventory will help more people, but you know what?…THIS is the time where maybe you have to compete against YOU. What does your life circumstances call for? Is renting STILL in your future? What are you capable of doing that can help you increase your income, decrease your debt, and raise your credit score. Let’s start digging in and going after our personal financial goals like they mean something and go hit those goals!

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So with that, let’s take a quick look at what’s coming up in the markets this week.

Tuesday: Building Permits and Housing Starts. Both of these are critically important to real estate and mortgage. We need more inventory any way we can get it. And with existing home sales really coming up short this year, our hopes for more buyer options in housing in 2024 will come from these batches of data. Hey Builders – we’re watching and hoping you step to the plate with more homes in the new year!

Wednesday:  Is the biggest day of the week, Month, and maybe even the year. Jerome Powell will announce the Federal Reserve Interest Rate decision, give his prepared remarks, and hold a press conference. Will they hike or will they pause? If they hike, what will they tell us about that decision? If they Pause, can they tell us that we’re finished or not?

Thursday: Unemployment Claims, Philly Fed Manufacturing Index, Existing Home Sales will be released.  Mostly par for the course here, but keep an eye open for any surprises.

Friday: Flash Manufacturing PMI and Flash Services PMI both come out.

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Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!https://youtu.be/vjCMN2XVq0Q

Home Prices Flattened While Mortgage Rates Peaked, but Are They Related?

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Recent reports and research reveal we’re experiencing some anomalies in housing and real estate. So today we talked about these recent hot topics to try and make sense of everything that changing:

  • Mortgage payments increased 17% annually to $2,162 in July 2023
  • Did we reach the peak for mortgage rates this year?
  • US CoreLogic S&P Case-Shiller Index Was Even Year Over Year in June, Signaling a Market Shift
  • Single-family construction slows across the country in Q2

Rate Hike or Rate Pause – All Eyes on Inflation and the Fed

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Mortgage Rates last week were pretty ugly coming off the 3 day weekend. The bond market and mortgage-backed security investors continue to gauge where the puck is going next when it comes to the fed and their monetary policy. The housing industry is strapped with historic unaffordability, the highest mortgage rates in 23 years, waning resale inventory and shallow new build inventory coming to the market. Some of this is seasonally expected in areas where in-climate weather puts a damper on home sales, but these trends are troublesome for sunshine states due to their economics, not just the weather. Towards the end of the week things evened out, but overall, mortgage applications are generally in decline year over year substantially, which then adds other pressures in the real estate system we have yet to deal with.

The Federal Reserve really has their work cut out for themselves this month. Everyone, I MEAN EVERYONE that’s connected to financial markets, mortgage and real estate is paying very close attention to every word spoken by fed members leading up to next weeks meeting, not to mention the data that shows whether we are in line with fed expectations or not. Which in turn, will determine whether we see them pause or hike rates again this month. Despite there being bold confidence from both the rate hike and rate pause camps, this could actually turn out to be a toss up, where they could  kick the can down the road and yet again delay any such decision until their final meeting of the year on November 1st. What will they do?….

So when is enough enough? We’re 18 months into the current Fed tightening cycle and still hearing that there is room for more rate hikes, and that elevated rates may have to be held higher for longer in order to see the desired effects the federal reserve wants to see. Further, there’s current data references rivaling past historic black eyes to make one think they’re going steady and about to get married. Mortgage rates their highest since 2000, anyone remember the dot.com bubble? How about affordability at it’s lowest since 2008, remember the global financial collapse? And what about available inventory? Again, lowest since global financial collapse. All these comparisons are pretty nasty, but rather than getting jerked around by the comparisons, all the real pressures are in the hands of the deciders who will ultimately determine whether we’re lining up for further pain, or gain hero status by getting us outta this mess. Which do YOU think will happen?

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So with that, let’s take a quick look at what’s coming up in the markets this week.

Wednesday:  is all about the CPIs. Core CPI month over month, CPI month over month, CPI year over year. This will probably be one of the biggest data releases in recent history because the Fed has pegged this piece as critical to their rate hike or rate pause decision. Not to be outdone,

Thursday: Core PPI month over month, core retail sales month over month, PPI month over month

Retail sales month over month, unemployment claims. As for all the “month over month” readings, these are all going to be critical to show the Fed momentum for the better or worse which will let them know whether they should pause or hike rates at next week’s meeting. Coupled with the previous days CPI data, these will likely be the determining factors…And I’m guessing they already know this prior to it’s release….and probably already know what they’re gonna do during their rate announcement Wednesday September20th.

Friday: Empire State Manufacturing Index, Preliminary Consumer Sentiment reading both come out and will play second fiddle to all the inflation data we’re getting. BUT let’s not overlook the impact of what these two reading actually mean in the function of the overall health of the economy as they measure two different parts of the economy, but do have connection points between business and consumer relationship of consumables and spending health.

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Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!https://youtu.be/vjCMN2XVq0Q

The Future for Mortgage Rates and Home Sales

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Look, there’s no easy way to address all these market conditions happening right now, so we’re tackling them head on!

1. New Listings Take a Hit, possibly due to higher mortgage rates. So Where are Mortgage Rates Headed?

2. New Home Sales Grow, even with Higher Rates, can this sustain?

3. Home sales will be weak in 2024 regardless of “soft landing” per Fannie Mae.

4. Jerome Powell says the Housing sector is showing signs of picking back up.

Tough Economic Realities & 3 Things You Need to Know About the Fed

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Last week mortgage rates got a touch better and eased up but not by anything we’d be shouting from the mountaintops about. Literally some people went from 7.5% to 7.3875% and others went from 7.3875%….to 7.25%. So not huge moves, but right now in an elevated rate market every little bit helps. This will be a short week and hardly any market shattering data coming out, it could be calm seas…Although I’ve said that before and been surprised by some Darkhorse item, ya know like multiple bank failures, or the systemic risks of the largest Chinese developer rapidly careening towards a huge problem causing ripple effects throughout intertwined markets, or a leaked Federal Reserve document that lists 7 midsize US banks they’re concerned will have solvency issues, that by the way, THE FED is directly responsible for. I mean, other than that…everything should be fine. It’s fine.

Last week was pretty rough when it came to economic data. Not only was there a huge miss in employment change, but Job openings missed by 660,000, GDP came in lower than projected, and unemployment edged up, but not as much as the Fed needs it to. Unemployment was 3.8% and remember they need it at 4.5% by the end of the year to hit their estimate of what it takes to slow down spending. Clearly at this point, the Fed’s work is far from over, we’re gonna have to wait longer for all the lagging effects of rate tightening to work their way through all parts of the economy. Which then means September becomes a VERY VERY important month and even more critical Fed meeting and press conference because the data isn’t leaning in their favor.

So will they hike rates or pause rates? This is the question everyone will be asking for the next 3 weeks leading up to the Fed Meeting Wednesday September 20th. On one hand we have people arguing that the Fed should clearly pause because we are starting to see some data move in the direction that they have claimed they need to see, even though it may not be at the speed at which the data should be moving. This argument maintains that we will eventually hit identified targets and that there need not be any further rate hikes in order to achieve it. On the other side, arguments for raising rates again are more speed related because of the slow lagging effect that is taking a very long time to achieve stated goals and the Fed’s concern that elevated rates for too long a period of time could cause longer lasting negative effects than would the short-term effects of even more rate hikes.

 

And here’s 3 reasons why we have a real problem on our hands with the Fed.

  • The Fed did not think that it would take this long to achieve their goal of returning inflation to 2%. Their public charts might say otherwise, but their language indicates they underestimated how long this would take.
  • The Fed has had to raise rates higher and hold them for longer and we are still not yet even in the ballpark of where they want inflation to be. It’s September 2023 – 18 months past the initial rate hikes of March 2022. Getting THIS far has taken THIS long, and there’s no reason to suspect that the end is just around the corner.
  • We have not yet hit their unemployment target of 4.5% that they say is required in order to achieve the price stability and inflation targets laid out in their projections. There’s 4 full months left to achieve that AND THEN we still have to wait for the lagging effect to hit the economic data. Thus 2024 is shaping up to be an even more critical year for our economy than what we thought 2023 was going to be.

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So with that, let’s take a quick look at what’s coming up in the markets this week.

Overall, this will be a very light week with the majority of the focus being on FED members. We will have 7 fed members all making speeches at various economic conferences in the 48 hour period from Wednesday afternoon through Friday morning. This is what interested ears will be listening to this coming week especially leading up to the next Fed meeting, Rate Decision, and Press conference on September 20th.

Monday: Is Labor day, all banks are closed and no economic data will be released.

Wednesday:  ISM Services PMI comes out.

Thursday: Unemployment Claims will be released.

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Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!https://youtu.be/vjCMN2XVq0Q