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Friday Market Update: June 24th 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with your weekly update. Let’s get right to it. Monday this week everything was closed for a holiday. I actually hope you had a wonderful holiday weekend.

Tuesday this week, we’ve got existing home sales. Existing homes sales for closings in the month of May and on a month-over-month basis, it was down 3.4%. We expected to see this. This is not shocking.

We also got some feedback from CoreLogic. So, CoreLogic has a rent index. And on a year-over-year basis, the blended rent index is up 14%. So… what that means is it’s looking at rents for new leases and how much they’re increasing if you’re going to go find a new lease and then it looks at rents for lease renewals and how much you’re paying for your lease renewal. When you blend those two together, it’s up to 14%. So, certainly, good cause for first time home buyers that historically make up about 30% of the housing market. As you’re seeing rents go up. And your cost increase in there is definitely a cause for looking at the benefits of purchasing a home.

Wednesday this week and every Wednesday we get feedback from the MBA. That’s the Mortgage Bankers Association. They give us information on purchase applications. So, this is new people applying for a mortgage and that was up 8%. So really good to see just continued strength in people applying for a mortgage to purchase a new home. Thursday this week for the first time, we had Jerome Powell talking about a recession. And for the first time, he said the recession is likely. You know, they don’t have a lot of credibility. If you look at what they said last year, they kept saying that oh, inflation is transitory, inflation is transitory, it’s not a problem. Now here they are hiking rates and now for the first time, you have Jerome Powell saying the recession is likely. We’ve been talking about this for a long time. If you watch any of these videos, you’ll see we’ve been talking about this since last year. So… not surprised to hear that.

As shocking as it sounds, we’re going to look at some charts here in a minute that recessions are historically always good for mortgage interest rates in the housing market, which is very shocking, I know, but we’re going to look at that in a minute. Also, speaking of the Federal Reserve and Fed rate hikes, just from talking to a lot of our clients, there’s a lot of concerns right now about Fed rate hikes going forward. We’re going to look at some charts there. And there is just a misnomer. A lot of people think, you know, the Federal Reserve hiked rates the other day by 75 basis points or three quarters of a percent, the mortgage rate shot up by three quarters of a percent as well. And that is not the case. What the Federal Reserve is trying to do is combat inflation. And the way that they combat inflation is by raising the Fed funds rate.

So, when the borrowing costs and this is for short-term lending, so when borrowing costs for short-term lending increase, it makes us as consumers think about spending money, and potentially, we won’t go out and spend as much money. So, this impacts car loans, RV loans, boat loans, credit cards, home equity lines of credit, everything that’s considered short-term. It does not impact directly mortgage rates. When the Federal Reserve hike rate 75%, it does not mean that mortgage rates went up. Actually, it was quite opposite. So, the Feds doing this to combat inflation. Inflation is the enemy of mortgage interest rates. So, as the Federal Reserve is raising rates and they’re more successful eventually in combating inflation, you’re going to see mortgage rates come down.

Again, we’ll look at a chart for that in a minute because I know it’s counterintuitive, but I promise you that’s how it works. Today, we got new home sales. New home sales looks at signed contracts for the month of May. This was up 10.7%, a really strong report. There was also a revision to the prior month in April when they added in an additional 38,000 units. I have no idea how they misplaced 38,000 units in the month of April, but they did. And when you look at new home sales for the month of April and May, now we’re up 18%. So, new home sales is very strong right now.

So, let’s look at some charts here. Bear with me for one moment, please. And I just want to run through a couple of items here with you real quick. I’m not sure if that worked correctly. Hold on one second. Screen share. I swear I’ve done this before.

Okay, so this is a chart I want to show you, which is Fed rate hikes leading to recession. So, it goes all the way back to 1955. Every single time in history you look at the Federal Reserve hiking rates, it always pushes us into recession. Federal rate hikes, recession. Fed hikes rates, recession. These dark lines that go up and down are recessions. Going into the 70s, the Federal Reserve hikes rates. We go into recession. 75, 80, 82, 90s 2000, we saw the same thing, Fed rate hike here. And then we had Fed rate hikes again going in 2010. We had a little bit of a recession here in 2019 that was started, and then Covid changed all that. So, continuously, we’re seeing Fed rate hikes always leading into recession back from the 50s.

Then if you look at mortgage rates during a recession, you go back to 72, every time you go into a recession, and again, the dark vertical lines of recession, mortgage rates always drop, right? In 1980, mortgage rates went from 16% to 11.75%. Can you imagine that? People are crazy right now about 6% interest rates or 5%. Rates went from 16 to 11.75%. Then we had another recession in 82 and rates went from 18% to13%. 91, 11% to 8.75. 2002, this is Alan Greenspan time, 7.375 to 6.75. 2008, 6% to 4.875. 2019. So, again and again and again, Every time we go into recession, it’s always friendly for interest rates.

So… looking at the US economy right now, anticipating we’re going to see a recession here in the beginning of Q1 2023, that’s favorable for mortgage rates. Also, housing always stays strong through recession. So, this goes looking at recessions back to the 60s, and this is the Case Shiller index which looks at housing appreciation. So… every time we go into recession, 70s, prices did well, 74, 75, they did well. Ended in 80s, home prices went up. Into the 90s, they went up. Beginning of 2000, they went up. Yes, this is a blip right here. Totally different situation. This was back in 2007, 2008, when you can have a 580 credit score, not have a job, no income, and still get 100% financing on a million dollar home.

So, not shocked that that had a slight housing collapse attached to it. And then going in right now, we’re pushed into recession. In 19, we saw home prices go up. So, housing always remains strong through a recession as well. So, I would say you just gotta be careful of what you watch in the media. If you watched the media for the month of April on new home sales, they would tell you the housing is collapsing. And then here we are in the month of May, you have housing up 18% for new home sales when you look at April and May. So, you got to pay attention to the data. Unfortunately, right now the media is just doom and gloom and it’s pretty pessimistic. But when you look at the factual data, it’s all pretty good right now.

I’m around all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, give me a call, call me on my cell phone, text me. I’d love to help you in any way I can. Happy Friday.

Friday Market Update: June 10th 2022 with BRIAN MANNING

Does the Fed Reserve actually know how to control inflation??

Well, inflation is at the highest level in 41 years…..

Tune in to this weeks market updated to get the run down!

I’m available this weekend on both Saturday & Sunday! Give me a call if I can help you with a pre-approval or getting you started on your home ownership journey!

Cheers,

Brian

303-500-3839

ManningApproval.com

brianm@rate.com

 

Friday Market Update: June 3rd 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with the weekly update. Let’s get right to it. Monday this week was Memorial Day. I hope everyone enjoyed their day off of work. So, nothing to report there.

Tuesday this week we got feedback from Case-Shiller. Case-Shiller is kind of the gold standard in reporting on the housing market. This is for the month of April. So, it’s a little bit dated. Year-over-year appreciation per Case-Shiller is at 20.7%. That might actually be the hottest number on record.

We also got FHFA, so they give us feedback on housing market and appreciation. They strictly look at homes across the country that are single family residences with conventional mortgages attached to them. And FHFA was at 18.7% a year-over-year basis as well. So, the thing to really pay attention to is that again, this is lagging, this is the month of April. This doesn’t really take into effect the mortgage rate increases that we’ve seen.

We have to see where this heads going forward. You know, certainly 20, 21% appreciation is not sustainable. I’ve been talking about this for a while. I would not mind at all watching this cool off I think we’re going to see that happen here in the near future because 21% appreciation is just an insane number. It’s just not something the housing market then can really keep going with.

Wednesday this week, we’ve got consumer confidence report. Consumer confidence down 2.2 points. Certainly seeing just a little bit of uncertainty. I know just from buyers that we’re talking to, they’re just a little bit nervous. They’re uncertain with what’s going to happen. Just the economy and the housing market in general. So, you saw a little bit of a slip in consumer confidence there.

But… We also got apartment list. So, they track rentals across the country and new rentals on a year-over-year basis are 15.3%. So, rental costs are going up and renewals are up 8% to 10%. So, whether you’re renting a new place or signing a lease for renewal certainly makes being a first-time homebuyer appealing because if you’re watching your new rental rates go up 15% or renewals of 8% to 10%. Renting is certainly extremely costly right now as well. So, that’s definitely still going to be a strong contributor to the housing market and keeping it strong.

Thursday this week, because there was a holiday, we got jobs report. So, first week of every month, we get jobs reports. Typically, the first Wednesday we get the ADP report. The first Friday we get the BLS. But when there’s a holiday in there like Memorial Day, it shifts a little bit. So, this Thursday, we got the ADP report. ADP reports on private hires across the country. And that was a little bit of a mess. There were expectations of 300,000 jobs and we got 128,000 jobs created. This is for the month of May.

And then also we have the BLS report today. BLS report came out really strong. There was an expectation of 300,000 new jobs created in the month of May and we got about 390,000. So, still really good to see a great strong jobs report there. But if you look at the media, you pay attention to what’s going on there as far as employers are concerned, there’s definitely some cause to be concerned and to pay attention to because you had Tesla come out yesterday. They employ 100,000 people. They’re pretty worried about the economy going forward. They want to cut 10% of their workforce and, you know, it’s 10,000 people. That’s a lot.

You look at Coinbase. Coinbase came out and said that they pausing their hiring. They’re even rescinding some of the offers they put out. You have Facebook with a freeze on hiring. So… You know, employment numbers are strong right now. We’ve talked about this in the past. When you start to see employment cool off and we see us moving past the all-time lows in unemployment that we’re at right now, you see us moving past the job reports that we’re seeing right now, that’s going to be a really good indicator of recession.

So… We’re going to have to wait and see what happens in the next, you know, month, two months, three months of job reports. But I won’t be surprised if you start to see a little bit softening in the job market there. Like I already said, that’s going to be a very good indicator of recessionary pressures going forward.

I’m available all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, call me on my cell phone, text me. I’d love to help you in any way I can. Happy Friday! Have a great day!

Friday Market Update: May 27th 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with the weekly update. So much to talk about this week, action packed. Let’s get right to it. So, Monday this week, let’s just talk about stocks from Monday. So… certainly, seeing some corrections in the stock market. You’re seeing stocks down from some of their highs down by like 10%. You know, some of them pushing bear market territory.

Bear market is when stocks are down 20% or more. Something we really like to pay attention here to is really the S&P 500. So… the S&P 500 makes up 83% of the stock market. What’s interesting is that five stocks alone in the S&P 500 make up 20% of the S&P. So, definitely not hard to see a lot of movement there when those stocks do move. And this certainly has an impact on the housing market. There’s this thing called the negative wealth effect. And when you have people that are looking at their financial portfolios, whether it’s a taxable account or 401K, when they see those numbers going down, it creates a negative wealth effect and certainly puts an impact on the home buying process. Even if you have a 401K that you’re not going to use right now, if you’re watching that value drop 10%, it certainly makes someone nervous and think, oh, maybe I shouldn’t spend money. Maybe I shouldn’t buy a house right now. So, certainly, some of the impacts in the housing market right now would definitely say are from the negative wealth effect.

Tuesday this week, we’ve got new home sales. New home sales were down 16%. That was definitely a market mover. You know, this is coming off some pretty high numbers. Something to… a couple of items to pay attention to a new home sales is there was really only 444,000 new home sales available, but of those, only 38% were able to be moved into a certainty. And I can tell you from the buyers that we’re working with, when we have buyers looking at new home sales and it’s really what’s called the dirt start. So, the home hasn’t even been started yet.

There’s a lot of uncertainty around that. And when you have interest rates that have moved up the way that they have over the last several months, we’re starting to see that some new home sales are making buyers nervous, because if the home hasn’t even started yet and maybe it’s going to be done in twelve months based on supply chain issues, it makes people nervous. And I’m definitely seeing having the market slightly impacted. There are new home sales from the rising interest rates. And that person that maybe was looking at a new home sale might look more at a resale right now. So, not really a surprise to see a little bit of a slowdown there in new home sales.

We also got Fed minutes released this week. You know, something I want to talk about the Federal Reserve is you’re starting to see a little bit of backpedaling. And one thing we want to be very aware of is that unanimously when the Federal Reserve starts to use the word pause in what they’re talking about. So looking at rate hikes right now, but when they start to say we might put a pause on rate hikes, definitely markets are going to react. You’re going to see stock markets react favorably for that. It’s not going to happen right now. The first Fed member just came out and used that word recently is something we’re going to want to pay close attention to because it’s definitely going to be impactful going forward.

Thursday this week, we’ve got pending home sales. Pending home sales were down 3.9% on a month-over-month basis, 9% on a year-over-year basis. If you looked at the media, MSNBC, they just had a field day with the negativity surrounding this. We’re going to look at some charts here in a minute just to give you some more feedback and color associated with the housing market and pending home sales. You got to watch the media though, because the negativity that surrounds this report right now is pretty bad. And it’s definitely, you know, media is always impactful. So, we’ll look a little bit more at that in a second.

And then Friday this week, we had a PCE. So, today, we got what’s called the personal consumption expenditure. This is the Federal Reserve’s favorite gauge of inflation. We don’t fully agree this is the best one. We really put a lot more weight in the CPI. The reason why we say this is because the PCE report does not include out-of-pocket expenses for medical or housing. So, it doesn’t really give the full impact or the full picture on inflation across the US. So, certainly, saw some inflationary pressures ease there. We had the PCE move from 6.6% to 6.3% on the headline number.

The core number that removes volatile items such as food and energy went from 5.2% to 4.9%. You know, we might see a little bit of low here coming into the summer months because this is replacing inflationary numbers from last year. And we had a little bit of low there as well. The question is going to be, you know, do these numbers stay low or are they going to rise a little bit coming into the fall? Another unknown right now is going to be fuel costs. You know, you have West Texas barrels at 113 at barrel, and the anticipation is the prices are going to go up. So, if you continue to see fuel prices go up, there might be an impact on PCE there as well. Another important item that we got today out of this PCE report was wages. So, private sector wages are up 12.7%. There’s a lot of talk right now that housing market, you know, prices have gone up, interest rates have gone up, and homes are becoming unaffordable.

But… you know, if you did a comparison of, say, 2016 to 2022, and you looked at the rise of home prices, you look at the rise of interest rates. If you also look at the rise of incomes and this 12.7% is a great example, you know, certainly, incomes have been keeping up with the rises in pricing as well. So… So, that’s probably one of the reasons why we’re not so worried about it. Let’s take a little look at a couple charts that I have here and just some feedback of what we’re seeing in the housing market right now. So, after the pending home sales report came out, this was a press release put out by National Association of Realtors Chief Economist. You know, he says home prices are really in no danger of any meaningful decline. Decline, excuse me. That there’s an ongoing housing shortage and any home listed properly is still selling swiftly.

And I 100% agree with that, as would most realtors in the marketplace right now. He also continues to say that with mortgage rates rising, they expect to see sales wane by 9% in 2022. Not shocking because we’re just coming off some extremely high home sale numbers after the post Covid boom. So, this is not really surprising to see. And expect home appreciation to moderate at 5% by year’s end. What does 5% mean? So, if we took a $750,000 home, if you bought that today and you put down 20%, if your home appreciated at 5% over seven years, this home is worth just over a million dollars. And at the end of seven years, if you buy a home, you pay closing cost to purchase it, your accumulative appreciation after your closing cost is about $301,000. And based on that 20% down, your return on investment is 201%. So, we’ve been saying this for a while.

We’re not really upset about seeing the markets calm down. I would love to see less appreciation. I would love to see calming of the bidding war. Certainly, moving into home appreciation that’s anywhere at 5 or 7% is not problematic. These numbers are still incredible and they’re appealing. Anyone that’s looking at buying a home looked at these numbers carefully and says, oh, that’s really not that bad. Some other items to pay close attention to is going to be housing inventory. So, there’s a lot of misnomers to fly around this.

So, you look at the media this week and there’s all this stuff about, oh, my gosh, inventory is increasing. MSNBC puts out this report of, you know, sellers trying to sell before they miss the market. But if we take a look at this, this is a chart on US housing home inventory. The first thing to pay attention to is that inventory always includes pending home sales. So, it’s not the most accurate. You know, with pending home sales right now, I don’t know the exact number, but I would say about 80% of homes that go under contract actually close. They’re not all going to close. 100% don’t close, but most will. So, if we look at our inventory levels from our low in February, because you always hit a low in the winter, we’re only up 180,000 homes in February.

But look at this, every single year… this goes back to 2017, spring housing buying market bump in inventory, 2021 bump in inventory, 2020 bumping inventory. Every single year at this time of year, you always get a bump in inventory. The challenge is that we’re not seeing the bump right now that we’d normally see and… I don’t think we’re going to get up to these numbers where we were last year. I think inventory is still going to stay really low. And if you look at active listings right now that are available in the United States compared to February, active listings right now are only up by 330,000. So, if you look at last year, we had a bigger bump of spring inventory last year than we’re having right now.

I don’t think we’re going to see the inventory levels this year like we did last year. So… You know, you have to be very careful with what you read about and what you see in the media because the media really doesn’t look at the whole picture. They’re not giving you data and details like this which we think are really important and something to pay close attention to. I’m around all weekend. I know it’s Memorial Day weekend. I hope everybody has an amazing holiday weekend. I’ll be available. If you have any questions, give me a call. If you have a buyer that needs to get pre-approved or you want to go through the pre-approval process, call me anytime, text me on myself phone. Happy Friday. Have a great day.

Friday Market Update: May 20th 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with the weekly update. Let’s get right to it.

Monday this week was a relatively quiet news day. Not a lot to talk about there. Tuesday this week we get some feedback from the NAHB. That’s the National Association of Homes Builders. This was on builder sentiment that is on the housing market index. And this kind of gives good real-time feedback from home builders. This reading came back at 69.

Expectations that it would really come back at a 75. So, a little bit lower than expectations. This is measured on a gauge of 1 to 100. Anything above 50 is actually considered expansion So, if we’re at 69, that’s still a pretty good number, although lower than expectations. We also got retail sales. Retail sales were really strong for the month of April. And then, it’s actually surprised a lot of people. Just looking at, you know, the economy, being in the face of inflation, to see really strong retail sales was a little shocking but also good to see.

Wednesday this week, we’ve got housing starts. So, this is new construction housing starts. The media had a field day with this. We’re going to look at a couple of charts here in a minute. Housing starts came back up being at 4% year-over-year. Expectations were a little bit higher and that’s still not a bad number. You know, a lot of builders right now still experiencing challenges with supply chain issues. So, not surprised to see that number down a little bit.

We also got some feedback from CoreLogic. They give us information on the rental market. So, on a year-over-year basis, the blended rental rate is up 14%. So… blended rate means that’s a combination of if you want to go rent a new place, how much are the rents there up a year-over-year and if you have a lease renewing, how much are your rents going up there on a year-over-year basis. So… A blended rate of 14% is actually a really high number.

Thursday this week, we got existing home sales. Existing home sales really measure 90% of the housing market. This is for the month of April. This is probably people depending on where you are in the country shopping for a home. In February, March, or the beginning of April, existing home sales were down 2.4% on a month-over-month basis or 5.9% year-over-year. Median home prices were still up. Average time from listing the contract was 17 days. And pace of sale is still better than every year since 2008. So, the media definitely doing as much as they can to put a negative spin on this.

I just want to show you something. Here a couple of items really quick just to give you some feedback on what’s happening in the market. So… This is going to show us… This is existing home sales. So, this goes back to 98, 99. This is what we’re at right now, you know, coming through Covid. We had a big decline during lockdown then you had this giant Covid bump after lockdown and of course, there’s going to be some natural cooling there which is… I think it’s really good to see. We’ve all been hoping to see a little bit of a cooling in the housing market but, you know, if we look at this average, the black line that we have, you know, as you reclined out of the recession after the 08 housing crisis, you look every single year, you know, up, up, up, up, up and we’re still probably what I would say in a really good position compared to all the prior years. So, I wouldn’t say existing home sales are as negative as the media makes it and then some feedback on inventory.

So, this just shows inventory in the housing market back from around 2012. And if you look at this every single year, you have this increase of inventory. It’s called the spring home-buying season. Oh, my gosh! This is amazing. It happens every year. And you look at the media right now and they’re just saying, oh, my gosh, inventory is going up. Is the housing market crashing? Well, every single year you get a bump up in inventory. All of us in this industry have been hoping for a bump up in inventory because there just haven’t been enough homes for sale.

So, you know, I would definitely say, you got to watch what the media says and how negative they are because they’re only looking at kind of very small pieces and when they say existing home sales are, you know, problematic but they’re not really looking at the true inventory story, I wouldn’t say that they’re really portraying the picture very accurately but not surprised because that’s what the media does.

I’m around on the weekend. If you have any questions, let me know. If you want to go through, our strategic buyer consultation, give me a call or text me on my cell phone. Happy Friday. Have a great day.

Friday Market Update: May 6th 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with the weekly update. I can’t even believe it. It’s jobs week already. That means another month has gone by. It just blows me away how fast time goes. Unbelievable! So much to talk about this week. So, let’s see. Monday this week was a quiet news day. Not much to talk about there until things really started heating up this week.

Tuesday this week, we get CoreLogic reporting on home appreciation across the country for the month of March. So, on a month-over-month basis, homes appreciated at 3.3%. On a year-over-year basis, so, homes appreciate at 21%. Since CoreLogic has been tracking housing markets across the United States, this is the highest number ever on record, which is kind of ridiculous. We’ve said this before. We would really love to see this calm down. We don’t think the 21% appreciation is sustainable. It would be great to see homes come back. We kind of predict that we’re going to see them come down into a high single digit appreciation. But right now, 21%, that’s just crazy.

Wednesday this week, we’ve got ADP. So, ADP is the largest provider of private payrolls in the US. So, the first Wednesday of every month, we get a jobs report from ADP. And this is for the month of April. So, in the month of April, there were 247,000 new jobs created. Expectations were for 400,000 new jobs. So, that was a slight miss there. Also Wednesday this week was Fed Day. So, you had conclusion of a two-day meeting. Jerome Powell speaking. Everyone expected a 50-basis point Fed rate hike, which is exactly what happened. They hiked rates 50 basis points. They did take a 75% rate hike off the table. That’s been talked about before by some other current voting Fed members. And Jerome Powell took that off the table with stock markets really liked it first on Wednesday and then Thursday, it just certainly all collapsed.

Also, they finally announced what they’re going to do with the balance sheet. So… as we went into COVID, they had this version of quantitative easing again, similar to what took place in 2007, 2008. And they were buying mortgage-backed securities in US treasuries. The Federal Reserve balance sheet got to about $9 trillion. And they’ve been talking about unwinding this balance sheet. Some people thought it would have started this meeting, but it didn’t. So, the announcement was on June 1st, the Federal Reserve will start the unwinding of their balance sheet. They’re going to reduce this by $47.5 billion on a monthly basis. So, it’s going to be $30 billion in US treasuries, $17.5 billion in mortgage-backed securities. They’re going to do this for June, July and August, and then they’re going to double that in September.

You know, at this pace, really with what they’ve already laid out for us, of the $9 trillion balance sheet, they’ll only have unwound about $550 billion of treasuries and mortgage-backed securities. And the question that we have to watch for there is if we start to see recession-like conditions if the federal reserve going to continue on this unwinding or do they have to stop or do they even have to come back as a buyer again? So, we’ll have to wait and see what happens there. February… not February.

Friday of this week, today, we get the BLS report. So, BLS is the Bureau of labor statistics. This is the government’s report comes out the first Friday of every month for employment. And the headline report said that we got 428,000 new jobs and there was, of course, an initial market reaction to that because unemployment was at 3.6%. But there’s definitely some cracks in this report. So, what happens is the headline number… it really is all based off modeling. We’ve talked about this before. It looks at what’s called the birth-death ratio. So, they look at in the month of April, how many companies were created, how many companies went out of business, based on the company that was created, what is the industry that is in? Based on the industry that is in, how many people would it hire? And if you have a company that went out of business, how many… what industry is that company in? And then based on that industry, if it goes out of business, how many people would get laid off? So, it’s called the birth-death ratio. It’s not very accurate.

That showed 428,000 new jobs. Then you got what’s called the household surveys. The household surveys when they call about 60,000 people across the US to get feedback from them on what’s happening for employment. And through that household survey, instead of an ad of jobs, there was actually 355,000 job losses in the US and you also had 363,000 people leave the labor force that are not looking for a new job. So, it’s kind of crazy. It doesn’t make sense. You have a headline number and then you have the household survey and there’s an 800,000 person swing in this report and it just doesn’t make sense. Probably, I would look more closer to the household survey because that’s actual direct content coming from people in the United States. So… the unemployment number went down when you look at this, but it’s really for all the wrong reasons if you’re really paying attention to the household survey.

I’m around all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, give me a call. Best way to reach me on the weekend is on my cell phone. Call me or text me. Happy Friday. Have a great day. I’ll talk with you soon.

Friday Market Update: April 29th 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with your weekly update. So much to talk about this week. So, let’s see. On Tuesday this week, we got a report from Case-Shiller. Case-Shiller is kind of the gold standard of reporting on the housing market. And Case-Shiller reports to the month of February, home appreciation was up 1.7% for the month. And on a year-over-year basis, housing appreciation was up 20%. So… still, ideally, we’d love to see this come down. It’s kind of a ridiculous number, and we’ll have to see how that goes into the rest of this year.

We also had FHFA. They give us a report on appreciation as well. And on a month-over-month basis… I’m sorry, for the month of February is up 2.1%. And on a year-over-year basis, it was up 19.4%. The difference is that Case-Shiller is measuring home appreciation on all homes across the country, whereas the FHFA is only looking at homes that have a conventional mortgage attached to them, so lower priced homes.

Also on Wednesday, we got new home sales. So new home sales for the month of March was down 8.6%. But what’s crazy is they had a revision back for the month of February and the revised February up 8%. So when you take that revision to account, new home sales were only down about 1%. You know, across the country right now, there’s about 407,000 new home available for sale, but only 35,000 are able to be occupied. The rest of them are in some stage of the construction process, can’t be completed, supply chain issues, whatever it’ll be. So, it’s only 35,000 homes available. So, not surprising to see new home sales down.

Also got a report from Redfin this week, and Redfin says that they have seen a little bit of a decline in homes that are getting bid up above the list price. But that number is still above 50%. So still, of all listings across the country, over 50% of them are still selling above list price, which is unbelievable.

Thursday, we’ve got GDP for the first quarter, so there’s typically three readings for the GDP. First reading show that GDP for the first quarter was down 1.4%. We’ve been talking about this for quite a while. We’ve been saying that a recession is coming. It does not mean that we’re in a recession right now, but definitely was not surprised to see that. There’s also a lot of talk this week about inflation, as we’ve been talking about for quite a while. A lot of people are wondering if we’re going to see peak inflation here in the summer. We don’t think so. We actually think we’re going to see peak inflation in the month of September. And if you get a peak inflation in the month of September, you don’t actually get that reading until the month of October. So, we still think that we have some time in front of us for the inflationary pressures to be digested into the marketplace. But again, we don’t think we’re going to see it until October.

Also… looking at peak inflation, you have inflation impacting mortgage rates. We’ve all seen mortgage rates rise. You’re going to have the Federal Reserve hiking rates. You know, typically, this will push us into a recession. We think the recession will come maybe end of this year, beginning of next year. But… historically, recessions are always very favorable for housing because interest rates come down. So, we’re not really overly worried right now as far as the recessionary outlook is concerned because we definitely think it’s going to really give us lower rates into the future.

Today, we got PCE. PCE is a personal consumption expenditure. This is the Federal Reserve’s favorite gauge of measuring inflation. On a month-over-month basis, inflation was up 9/10th of a percent, which is a really high number. Expectations were it to only be up to half a percent. So almost double. On a year-over-year basis is at a 40-year high of 6.4%. We’ve talked about this in the past. I don’t really think that this is the most accurate number for inflation because the PCE does not include out-of-pocket medical expenses or housing expenses. And when you see medical expenses going up and you see housing expenses going up, certainly there’s going to be some inflationary pressure there.

And then we also got the Employment Cost Index. So, the Employment Cost Index was Alan Greenspan’s favorite gauge of inflation, and Employment Cost Index was up about 1.1% in Q one of this year. So last week’s update, we talked about this Inflationary spiral where you have cost of goods increasing that employers have to increase the income that they’re paying their employees to keep up with inflation. Then you have inflation go higher and then you have wages go higher. So, you kind of get this upward spiral that you have to keep up with with the cost of Goods increasing. So, certainly, the Employment Cost Index is something to watch really carefully because that’s kind of playing into that spiral we talked about.

Also, we got Apartment List report. Apartment List said last month that we had rents go up 9/10th of a percent on a month-over-month basis, which is a really high number. And on a year-over-year basis, rents were up 16.3%. So, rental market across the United States is certainly very expensive. I’m available all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, learn how you can close in 18 days and compete with a cash offer, give me a call, call me on my cell phone, text me. I’d love to help you. Happy Friday. Have a great day.

Friday Market Update: April 22nd 2022 with BRIAN MANNING

Happy Friday! Brian Manning here with your weekly update. Let’s get right to it.

So, Monday this week, we had Freddie Mac coming out with a statement. This is in regards to new construction homes saying that we’re 3.8 million homes behind on actually delivering to the public what’s needed for new purchase transactions. You know, kind of difficult to keep our finger on the pulse here or really to determine the accuracy of that statement, even if it is a high number. Still, whether you’re, you know, 2 million, 3 million, 3.8 million homes behind on delivering new construction homes to the public, certainly still seeing challenges in the new build area with homes being behind on delivery to the public. So… now, I’m certainly just playing more and more into the challenges with inventory that we’re seeing.

Tuesday this week, we had the World Bank giving a statement and they were cutting their global forecast for growth, went down from 4.5% down to 3.6%. So… you know, for sure, the World Bank, an incredibly important institution definitely seeing recessionary pressures around the world, you know, that we’re likely to be pulling into here in the next year or two.

Also Tuesday this week, we had Fed President James Bullard speaking. He was talking about a 75 basis point or a 0.75% rate increase with the Federal Reserve. You know, may be unlikely that we would actually see a 75 basis point rate increase. Perhaps, they’re just saying this to soften the blow so when they raise them by 50 basis points or half a percent, it doesn’t really feel that bad. But certainly, it looks like the Federal Reserve without admitting, just admitting that they are behind the eight ball here on taming inflation because… you know, we have some fed presidents voting members as of February saying, oh, we don’t even need to raise interest rates. And now you’re seeing some fed presidents come out and say 75 basis point increase. So… definitely a disconnect there.

Wednesday this week, we got existing home sales. So… existing home sales looking at the month of March. So, this was home sales that took place. You know, existing home sales in March is really looking at properties that went under contract depending on where you are in the country. Sometime between mid-January and mid-February, existing home sales were down 2.7%. Actually, better than expectations. Expectations were that existing home sales to be down 4.5%. So, still just inventory challenges everywhere we look. An interesting component of this report though was about cash buyers. So… cash buyers went from making up 25% of all purchase transactions to 28%. You know, historically, they used to be below 20%. So… It’s interesting to see that we’re just seeing more and more cash buyers in the marketplace.

Also Thursday this week, we just got more and more talk about inflation. And now, we’re starting to hear about what’s called the wage inflation spiral. So, what a wage inflation spiral is, and it’s something for us to pay very close attention to, is that you have employers that are looking at the cost of inflation, right. You have the cost of goods increasing. As the cost of goods increase, you have an employer that has to raise the wages that they pay their employees so they can afford the cost of goods going up.

And then you have the cost of goods going up even higher and then you have employers that have to continue to raise their wages as well. So… A wage inflation spiral would be really bad because it’s very hard to tame inflation when you have inflation costs escalating and then you have employers trying to increase this. I was actually just reading an article this morning about wage pressure inflation. And Florida for example, top five markets for wage pressure inflation. Sarasota alone was up like 20%. So, certainly, something to pay attention to and it’s going to be impactful in the marketplace.

But really the challenge is, you know, what is the Federal Reserve going to do? The Federal Reserve is so far behind. You know, now, they’re looking at raising rates you know, around 3 to 3.5% this year. You know, it certainly pushes the US economy into a recession. And perhaps, that’s what they need to do to really tame inflation. You know, from us and the mortgage side and the real estate side, this isn’t necessarily a horrible thing. You know, recessions are usually very real estate friendly. So, when you see the federal reserve hike rates like that, when you see them push us closer to a recession and you see that have an impact on inflation and inflation comes in check, that really just means that mortgage rates will come down and that usually is very beneficial for the housing market as well.

So, we’ll have to keep an eye on this. I definitely don’t envy the Fed’s position because they’re in a tough spot right now. I’m around all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, give me a call. Call me on my cell phone or text me I would love to help you any way I can. Happy Friday. Have a great day.

Friday Market Update: April 15th 2022 with BRIAN MANNING

Happy Friday. Brian Manning here with the weekly update Let’s see what we got going on this week. So, Monday, we really saw… We’re just seeing general widespread inflation everywhere. If you look across the world right now, in some countries, the cost of food is up 40%. So, you’re just seeing a tremendous amount of inflation, especially in the food industry around the world. Tuesday this week, you know, we had a lot of talk about real estate markets in the media this week. And just a lot of negative talk.

So, I just want to throw something out there for color in the situation. So… in the year that we’re in right now, we’re expected to see $2.6 trillion of new mortgage originations. So, if you look at the last ten years, actually last 13 years of mortgage originations, that’s still in the top three and the top two being last year and the prior year. But… in those years of mortgage originations, you had a tremendous amount of refinance volume that took place as well. So, if you look at 13 years of markets and you pull out last year and the year before, this year’s origination volume is really expected to be one of the highest ranking ever. So, you got to watch the negativity in the news because we’re still seeing a tremendous amount of volume go through. And if we do get the 2.6 trillion of origination volume this year, it’s still going to be one of the best years ever in the purchase market. So, you got to be careful with the negative media there.

Also on Wednesday… Sorry, Tuesday this week, we got PPI. So, PPI stands for the Producer Price Index. This is a measurement of inflation on a wholesale level. We really look at the core rate because the core rate of inflation strips out volatile items such as food and energy. So, core rate on a month-over-month basis was up 1% and on a year-over-year basis of 9%. Again… you know, all this inflation data coming in just really feeding the Federal Reserve likely to see a half a percent rate hike here in May. Not necessarily a bad thing. They definitely need to do something to curb inflation. Historically, rate hikes over time will come inflation and it’s going to be beneficial for mortgage rates. So, PPI was really high.

Wednesday this week, we had quiet news day. And then Thursday, we had a study released from bank of America. You know, Bank of America, largest bank in United States carries a half to a third of all banking customers. And their report shows that credit card debt is on the rise. So, consumer spending is still up. Consumer spending is still really strong, but a lot of people are not spending the cash that they have on hand. A lot of people using credit cards and we’re now starting to see a rise in credit card debt.

We also got the Cass freight shipping index. You know, we talked about this a lot in 2019 leading into really what was the start of a recession in 2020 that all changed from the pandemic. But Cass freight shipping index is a really strong leading indicator because it looks at goods being shipped around the United States. And Cass shipping freight went from being up 3.6% to now being up 6/10th of a percent. So, the shipping index is still up but we have definitely seen it come down dramatically. And again, this tracks goods of new purchases being shipped around the United States.

So, we’re starting to see some indicators there of a slow down. For today, markets will close early for good Friday. I do want to wish everyone a happy Easter. A happy Passover. I will be around all weekend. If you haven’t any questions, give me a call. If you want to go through our strategic buyer consultation, call me on my cell phone or text me. You can reach out to me Saturday or Sunday. I’ll be available both days. Hope you have a wonderful day. Talk with you soon.

Friday Market Update: April 8th 2022 with BRIAN MANNING

Happy Friday. Brian Manning here with the weekly update. Let’s see. Monday was relatively quiet news day. Not much to talk about there. Tuesday this week, though, we had markets just get absolutely crushed. And why did that happen? So, we had Fed Governor Brainard talking and in her speech, she says that she thinks that the runoff of the balance sheet should happen at what she said, a rapid pace. And that definitely freaked out all markets because, you know, right now the Federal Reserve has its balance sheet.

We’ve talked about this a lot in these videos. It’s at about $9 trillion. And that was really all absorbed during what was called quantitative easing. It was their monetary policy to get us through the pandemic. And certainly, what they did at the time was incredible and very helpful and it definitely kept rates low. But now they have to do something with this balance sheet. And her statement of the runoff being a rapid pace just freaked everyone out. If you look at markets on Tuesday, this week, stock markets were down. Mortgage rates went up. No one wanted to hear that because that’s not like laying out a plan that’s just really freaking people out. So… not a good reaction there from her comments on Tuesday.

Also on Tuesday, we got CoreLogic. Core logic measures home appreciation. For the month of February, appreciation was up 2.2%. And on a year-over-year basis, we have appreciation up 20%, which was, I think, maybe the highest number ever on record. So still crazy appreciation in the housing market.

Then Wednesday this week, we got the release of the Fed minutes. So… the Fed minutes were minutes from their last meeting, which was three weeks ago. And keep in mind that their next meeting coming up is not for another three weeks. But, you know, on the heels of Fed Governor Brainard’s comments, we get the Fed minutes and the Fed minutes finally start to really identify what the Federal Reserve plans might be going forward with the runoff of this balance sheet. And they had said in the Fed minutes that ideally, they’d really work their way up to a runoff of $95 billion a month. But of that, only 35 billion per month is really mortgage-backed security. So, if they do hold to that plan and it hasn’t really been fully laid out yet… the question right now is, would that really be also disruptive in the mortgage markets? And it really may not be. Again, there’s three weeks until the next Fed meeting. A lot could change between now and then. So, I have to wait and see what happens. But definitely markets calm down after the release of the Fed minutes on the heels of what Fed Governor Brainard said, because it did add a little bit of instability and planning into it. So, I’ll have to wait and see what happens.

Thursday was a relatively quiet news day. And then today, looking at the media this morning, you know, it just blows me away and their comments I would say, you definitely have to be so careful of the media and the fear mongering. So, for example CNBC headlines has blown up today of housing and are we in a housing bubble? And one of the things was oh, the inventory was up 8%. I mean duh! I mean, that’s just a ridiculous thing to even say. If you look at this for a couple of reasons, one, yes, there’s a spring homebuying season. This happens every single year. If you look at the last 20 years of our marketplace, March, April, May, you always see an increase in inventory. Anyone out there right now that’s a realtor or any buyer out there that’s looking for a home is praying for more inventory because our inventory is at record lows.

So, moving into the spring homebuying season and seeing a slight increase at 8% of inventory across the country I think is welcomed in every market. So, you got to be careful with what you see in the media. You have to be careful with the fear mongering because certainly, you know, a small increase of inventory here in the spring does not fix the demand issue…. I’m sorry the inventory issues that we’re seeing right now and certainly, does not mean we’re going to housing bubble. So, got to watch the media because it’s pretty bad. I’m around all weekend. If you have any questions let me know. I’ll be available Saturday and Sunday. If you have any buyers that want to go through the strategic homebuying process, call me on my cell phone, text me. I’d love to help you in any way I can. Happy Friday. Have a great day.

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