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Friday Market Update for the Week of October 22nd 2021

Happy Friday, Brian Manning here with the weekly update. So Monday this week we had global yields on the rise. Certainly inflationary pressures around the world are going to impact global yields as well which have an impact on rates around the world. Tuesday this week, we got homebuilder sentiment. So homebuilder sentiment moved up to 80. So this is on a scale of 1 to 100. And really, anything above 50 is considered expansion. So still seeing a pretty hot new construction market. Also, buyer traffic, so this is new buyers coming through, new construction sites was up as well.

Thursday this week, we had Atlanta Fed president talking about Q3 GDP. So originally back in August, their expectation was that Q3 GDP would be up 6%. And now there’s a revision saying that they think Q3 GDP is going to be up a half a percent, 0.5%. So keep in mind that if you have negative GDP two quarters in a row, technically that means a recession, I won’t be surprised if we start to see recessionary pressures moving into the beginning of 2023. Not necessarily a bad thing, because mortgage rates usually always go down when there’s a recession. So something to keep an eye on, but watch out for GDP, because certainly seeing some decline in numbers there.

We also got existing home sales. This is for the month of September. On a month over month basis, existing home sales were up 7%. So unbelievable, and still wonderful to see just a very robust housing market. Also available inventory right now is at 1.2, 7 million units. I certainly hear a lot of talk about a bubble, but I’ll give you some comparison. We have 1.2 7 million units for sale in the US. In 2007, there were 3.7 million homes available in the US at the same exact time. So certainly when you see 2 million discrepancy in homes for sale now versus 2007, completely different marketplace. Days on market is at 17. So still home selling just exceptionally fast.

One thing I want to bring up is a new construction program that we have, we can do a long term rate lock. So if you’re looking at buying a new construction home, we can now lock your loan for up to 365 days. If you have any questions here, let me know. And I just want to take a look at the charts here because this is something that’s really important. So what I have up right now is just the yield on the 10 year treasury and mortgage rates will usually generally follow suit in the direction of what the yield of the 10 year treasury is doing. So really, I would say from about September 15th through today, we’ve just kind of seen a real steady incline as far as the yields are concerned. Certainly the pattern in the trend right now is an upward rise as far as yields are going to be concerned, you know, now we have a new top here at 1.7% for the yield on the 10 year treasury, which is crazy that we haven’t seen that for quite some time now. So it would be interesting to see if this is really a ceiling of resistance and if we’re going to see a little bit of calming down in the yield on the 10 year treasury. If we do it’s positive for mortgage rates. But this right here means that we’ve kind of seen a very slow, minimal steady increase over rising mortgage rates from the beginning to middle of September through today. It’s not crazy, we’re still locking rates at phenomenal numbers right now. But we have definitely seen a very slow, steady increase in rates.

And we just need to keep an eye on the yield here for the 10 year treasury because if it continues to go up, you know, it just means that mortgage rates are going to continue to rise. So you know I would say looking into next year, I won’t be surprised if we start seeing rates in the mid to higher threes. I don’t think we’re going to hit 4% but I’m definitely thinking moving into next year and even towards the end of next year we’re going to see that 3.5%-3.75%. 30 year fixed rate, so I have to keep an eye on this and see what happens but the yield on that 10 year treasury is something we want to watch closely. I’m around all weekend. If you have any questions let me know. I would love to help you in any way I can. If you have any questions on this new construction rate lock program, I can give you the details. Just give me a call. Happy Friday. Have a great day.

Friday Market Update for the Week of October 15th 2021

Happy Friday, Brian Manning here with the weekly update. I’m super pumped because it’s the Friday before Fall Fiesta number seven. I’m ready for this year. I hope you guys are, it’s going to be really fun. Let’s talk about what’s going on in the market. So Monday this week, markets were closed, stock markets were open but bond markets were closed. So that means mortgage companies were mostly closed on Monday. Tuesday this week. Let’s see. So it’s been about five weeks since the pandemic unemployment assistance has phased out which is really Labor Day weekend but what’s interesting is that in the month of August 4.3 million people left the labor force and unfortunately, that was very heavily weighted towards the hospitality industry. So why did 4.3 million people leave? I have no idea. Where did they go? I have no idea. But the whole employment market is just kind of crazy right now. But that’s a lot of people to exit out of the labor force.

Also, we got CPI this week, that’s the consumer price index for the month of September, on a month over month basis, CPI increased by four tenths of a percent. That was more than expected. And on a year over year basis, the inflationary measure of the consumer price index went from 5.3% to 5.4%. So we’re really seeing inflationary pressures everywhere. Thursday this week, we had the minutes released from the Fed meeting, the Fed meeting took place on September 22nd. They’re usually pretty market moving, so the minutes came out and it basically showed that everyone is collectively agreeing to start the tapering. So right now, like we’ve talked about, the Federal Reserve is in this form of what’s called quantitative easing, it’s an emergency measure in place for monetary policy to help keep the US economy under control financially, it started at the beginning of last year with the beginning of COVID. And right now they need to really figure out how to unwind it because it’s really agreed for when they said that we’re kind of no longer in these… in the emergency situation that we were in at the beginning of last year. So our guess is that the Federal Reserve will begin tapering, probably in December of this year, and then their process of tapering will wind down this bond buying program, probably through like June of next year. So that’s fine. But the other question is right now there’s trillions of dollars on the Federal Reserve’s balance sheet, and they’re also reinvesting the trillions of dollars. So what I mean by that is when they have mortgage backed securities that the Federal Reserve owns, if someone sells a home, or they pay off their mortgage, or they refinance and they pay off the mortgage, the Federal Reserve, instead of reducing their balance sheet, is taking those funds and reinvesting them. So right now, they’re reinvesting like $60 billion a month. So even if the Federal Reserve goes through this tapering process that would end in June, there’s still no talk of what’s going to happen with the reinvestment of mortgage backed securities and treasuries, and that is definitely helping keep rates low right now. Also, there was no mention of a rate hike in the Fed minutes so who knows what’s going to happen there.

Also, this week, we got PPI. PPI is the producer price index that measures inflation on the wholesale level, on a month over month basis, PPI was up a half a percent, alright? So wholesale level cost of goods are increasing. On a year over year basis, the PPI reading went from 6.6% to 6.8%, the highest level ever on record. So again, inflationary pressures everywhere. Also, we got the Cass freight shipping index. So Cass freight looks at the cost of shipping goods around the US from one place to another. And so Cass freight shipping showed in the month of August the costs were up 27% and in September, they were up 31%. So we’re still seeing a tremendous amount of pressure on supply chains. When you see Cass freight shipping index and you see those costs go up, that has an impact on the PPI, when shipping costs go up, cost to produce goods goes up. That’s why you see the impact on the CPI because that’s impacting us as consumers. So just like I said, inflationary pressures everywhere. Goldman Sachs today, though, released a report. Goldman Sachs predicts that housing appreciation for the year of 2022 will be up 16%. They see still a very strong robust housing market for all of us in the year 2022. I would probably agree with them, but we just simply look at supply and demand. Certainly, demand right now is still at an all time high, demand is going to remain at an all time high and supply, inventory of houses for sale is still at an all time low. So just purely a simple imbalance of supply and demand is definitely going to still continue to press us forward with probably high appreciation as Goldman Sachs would say, anticipated is 16% in 2022.

I’m around a weekend, if you have any questions, let me know. We really hope to see you at Fall Fiesta, that’s taking place this Sunday, the 17th and if you have any questions, reach out to us. We’re more than happy to help you in any way we can. Happy Friday.

Friday Market Update for the Week of October 9th 2021

Happy Friday, Brian Manning here with the weekly update. Let’s see… today we’re just going to talk about the big jobs report. So the question was what was going to happen with employment and unemployment for the month of September. So analysts’ expectations were that 500,000 new jobs would be created, certainly had a miss there, but that was on the BLS report. What’s interesting is if you look at the household survey, there was over 500,000 new jobs created in the month of September, and also in the private sector, there’s about 318,000 jobs created, so not as horrible of a report as just the headlines would see.

Also, you know, something to pay attention to and really ask and see whether that’s going to be an impact next month is that this jobs report was based on a sample reading of the week of September 12th through the 18th. Well, pandemic unemployment assistance, really ended Labor Day weekend. So this is only about 10 days after the unemployment assistance program has ended. So the question is, you know, how many people out there were actually looking for jobs that waited until the last minute, that they let the unemployment assistance end? And was this September 12th through the 18th sample reading really the best time? Maybe not. So we’ll have to wait and see next month when the next jobs report comes out. Unemployment did go down slightly, I think it went from 5.2% to 4.8%. So a little bit of a decrease in unemployment there. Not really having a major impact on mortgage rates in the bond markets right now. Everything’s just kind of flat. So we’ll have to wait and see what happens. I’m around all weekend, if you have any questions, let me know. Call me on my cell phone, text me,
any mortgage questions, you can get pre-approved. I’d love to help you in any way I can. Happy Friday. Have a great day.

Friday Market Update for the Week of October 1st 2021

Happy Friday, Brian Manning here with the weekly update. Let’s get right to it. Monday this week, pretty quiet news day, not much to talk about there. Tuesday this week we had two Fed presidents, Kaplan and Rosengren stepping down, a little bit of controversy there because we have the Federal Reserve in the space of quantitative easing, right? They’re in this bond buying program, purchasing $120 billion a month of US Treasuries and mortgage backed securities, and then it gets discovered that we have these two fed presidents secretly making trades behind everyone’s back in regards to these mortgage backed securities and treasuries as well. So they had to step down, probably better off to see that happen.

Also, on Tuesday, we got Case Shiller. Case Shiller is kind of the gold standard for housing data in the US. And Case Shiller tells us that houses are appreciated at a rate of 20%. I think that was actually the highest number ever on record, it’s pretty ridiculous. A lot of talk about bubbles, what’s going to happen in the future. I mean, surely, if we just look at supply and demand, I would say we’re not in a bubble. When I look at the just exceptional amount of buyers that are out there in the marketplace, and how low and limited inventory is, it’s still just a rather significant imbalance in the marketplace. So we’re probably going to see this continual strong housing for quite a while. Wednesday this week, we got pending home sales. So expectations for the month of August was that pending home sales will be up 1%. Pending home sales were up 8%. So that was really a strong report and good to see.

Today, we get what’s called a PCE, that’s the Personal Consumption Expenditure. It is the Federal Reserve’s favorite gauge of inflation. Now, if we look at what’s called the core rate, so the core rate is this gauge of inflation that strips out volatile items such as food and energy. And on a month over month basis, we’re going to say that this is up 3/10%. On a year over year basis, right now it’s at 3.6%. So inflation itself has really held steady from last month to this month. But what happens is, on a monthly basis, the new monthly number that comes out removes the monthly number from last year, right? So if we look at this time last year, inflation was at 3/10%. We get our inflation number this time, it’s at 3/10% so it holds flat, but when you start looking into the next upcoming months, one month is at 1/10%, other month is at 0%, another month is 0%. So if we stay on this track of inflation, of an increase of 3/10% on a monthly basis, and we’re wiping away last year’s numbers on a month over month basis, by the time we get to January, we’re going to see inflation on the core rate at 4.2% to 4.3%. You know, it’s kind of crazy because Fed president Jerome Powell has been saying “Oh yeah, inflation is transitory, we’re going to see it go away” until this week, it was really the first time you could tell he was kind of not singing that same tune, and he really came out and said that inflation has been frustrating to him. So I’m not going to be surprised if we kind of see these numbers continually run up, especially putting into January of next year.

I’m around all weekend. If you have any questions, let me know. I’d love to help you in any way I can. Call me on my cell phone, text me. Happy Friday. Hope you have a wonderful weekend.

Friday Market Update for the Week of September 24th 2021

Happy Friday, Brian Manning here with the weekly update. My gosh, we have all kinds of stuff to talk about this week but before we do, just want to remind you – Fall Fiesta coming up, Sunday, October 17th. Super pumped, doing it outside of the park this year in Boulder. We got tacos, Margaritas, we’re going to create a fall studio scene, we have a professional photographer coming in to do family photos for people, take a look at our website. It’s in the email here in the link for information on the event and how to RSVP. Can’t wait to see everybody there.

Let’s talk about what’s going on in the markets because it’s all kinds of news this week. So Monday this week, we had stocks that were lower, all based on Evergrande information coming out of China. So it’s a company in China that has about $300 billion in debt. And there’s just concerns right now that they will not be able to meet their debt payments that are coming due and if they don’t meet their debt payments, what the impact will be economically in China and around the world. So we’ll have to wait and see but certainly, all eyes on this company right now to see what’s going to happen.

Tuesday this week, we got housing starts. So housing starts looked okay, you know, the headline number on a month over month basis was up 4%. But that really takes into account single family residences and multifamily. So if we just look at single family residences, single family residences were down 3%, which is really just meaning that we’re still under supply in the housing market. Also new permits were flat. So we did not see an increase or a decrease of new permits and completion, so homes being completed and delivered to the marketplace were down 5%. Another interesting statistic is that homes that were permitted last year, but were not yet delivered this year is up 50%. And that’s just due for so many various reasons. So still seeing supplies… Still seeing challenges in supply for inventory.

Wednesday this week, we got existing home sales. On a month over month basis, they are down 2%, still seeing inventory on a year over year basis down 13%, new construction is down, completion of homes is down, inventory on resales is down so you’re going to see, of course, a lower than expected lower existing home sales because inventory is just really tough to come by.

And then probably the most impactful this week on Wednesday was we had Jerome Powell, President the Federal Reserve speaking, wrapping up a two day meeting. Okay, so the Federal Reserve really has two tools that they can use towards monetary policy with stimulating the economy. The one they have is what’s called the Fed Funds Rate, which is when you hear rates drop down to near zero levels as the Federal Reserve dropping rates, the other is their asset purchasing program, could also be called quantitative easing. So right now the Federal Reserve as a result of COVID has been actively purchasing mortgage backed securities and US treasuries. If you’ve watched any of these videos, we’ve talked about this in the past. So Federal Reserve is buying $80 billion a month of US treasuries, and they’re buying $40 billion a month in mortgage backed securities. Typically, these asset purchases used to add stability into the US economy and also force rates down to spur consumer spending are really used in emergency conditions. Well, this really started March-April of last year knee deep in COVID and the question really be, are we really in emergency conditions anymore? No, probably not. So now the Federal Reserve has to, at some point in time, start to unwind this bond buying program. So Jerome Powell on Wednesday said that he really thinks that US economy has met his standards of what he’s looking for in employment, he does not need to see a blockbuster report for the month of September for them to start tapering. He’s kind of opening up the gates right now for the tapering and what that means is they’re going to start reducing their asset buying programs. So they eventually will slow down on their purchasing of mortgage backed securities and US Treasuries, I kind of believe, in the November 3rd meeting, at the end of that, that Jerome Powell will announce the initiation of their tapering and that’s probably going to start in like December.

So that means they’re going to purchase less mortgage backed securities and less US Treasuries, alright? Now, the one question is the US, the Federal Reserve, they have an $8 trillion balance sheet right now. So there’s $8 trillion that they’re holding, that’s for round numbers, in US treasuries and mortgage backed securities. And right now they’re reinvesting those. So what that means is, if they own a mortgage, and that mortgage is paid off. So the borrower refinances their loan, or they sell the home and the mortgage gets paid off, the Federal Reserve is taking that money that they got from the mortgage that was paid off, and they’re reinvesting it and they’re buying additional mortgage backed securities. So the question is, and no one’s really talking about this right now, and we have to see what’s going to happen is, if the Federal Reserve tapers out of their bond buying program, what’s going to happen with this $8 trillion balance sheet, and if they just taper out of their purchases right now at $40 billion a month in mortgage backed securities, they still keep reinvesting $60 billion a month from their current balance sheet, does it really have an impact? Well, we’ll have to wait and see what happens.

So yesterday, Thursday, they kind of started what’s called the taper tantrum. So if we look at what’s going on in the markets here, this is a snapshot of mortgage backed securities. This green candlestick right here is Wednesday. So there’s kind of a wild ride on Wednesday. This is when Jerome Powell started talking. So since this is a snapshot of mortgage backed securities, this is the cost of the bond and mortgage rates will go opposite. So opposite of what this is doing. So Wednesday was a little bit of a wild ride. Yesterday, you’ll see here, the taper tantrum really started, investors started to freak out, certainly going to be an impact on mortgage rates. So you did see a slight increase of mortgage rates yesterday, maybe going to get a little bit stability back today but as you can see from, you know, about August 3rd through today, we have now started to slowly see a very slight rise of mortgage rates. We’ll have to wait and see what happens. As we talked about, there’s a lot of moving parts right now. We have the Federal Reserve, we have to wait until November to see what they’re going to say, we have to see if there’s any word of reinvesting with this $8 trillion balance sheet. I don’t really know what’s going to happen but it’s going to be interesting to see how it impacts everything. I know this is a long update for today. I’m sorry, but there’s a lot of news to get out.

I’m around all weekend. If you have any questions, let me know. Call me, text me. Whatever works for you, I’d love to help you. Happy Friday. Have a great day.

Friday Market Update for the Week of September 3rd 2021

Happy Friday, Brian Manning here. I can’t believe it is jobs week already. We’re going to get into that in a moment, but before we talk about what’s going on this week let’s just talk about what happened in the end of last week. So in the last week, we had the wrapping up of a Federal Reserve meeting. At the end of these meetings, Fed president Jerome Powell always does a speech in kind of a press release. His comments were certainly rather dovish, but nothing that led us into really learning about what their plans are at the end of September, as far as their Jackson Hole meeting, because usually the end of September, at the end of this meeting, if they’re going to announce something rather impactful, this is kind of a usual place where they would do it. Our guess is really that the Federal Reserve was waiting to see what’s happening today with employment reports, which we’re going talk about in a minute here.

Monday this week, we’ve got pending home sales. Pending home sales for the month of July were down 1.8%. Not really too bothersome, really for a couple of reasons. One, inventory is still down 12%. Number two, usually in a home buying market or home buying season, spring is usually really the big time for purchases to take place. So you see a lot of activity in the spring because people are trying to make moves, usually before kids are going back to school. Typically July and August calm down a little bit going into summer. So certainly seeing what happened in month of July, it wasn’t really that worse at all. Tuesday this week, we got Case Shiller. So Case Shiller measures home appreciation on national level. So on a month over month basis, homes appreciated at a rate of 2.2%, which is really strong. On a year over year basis, home appreciation was up 18.6%. So certainly just a blockbuster report and just really strong appreciation across the nation.

We also get the FHFA, and their component of appreciation. So the FHFA looks at homes across the United States, only that have a conventional mortgage attached to them. So if its owned free and clear, has a VA, USDA, FHA mortgage, those don’t count. This is only homes across the United States that have conventional mortgages attached to them. And those rose at an annual rate of 18.8% appreciation. So unbelievable. The rental component here, it’s pretty crazy to see as well. So on a month over month basis, rents increased by 2.1%. On a year over year basis, rents increased by 14%. So you’re definitely seeing some heating up there in the rental market.

Wednesday this week, we get ADP. So the first week of every month, we always get employment data. So being in September, we’re getting data for the month of August right now. First Wednesday of every month, we get ADP. ADP reports back on private payrolls. So expectation was that 600,000 jobs would have been created in the month of August, instead of we got 374,000 new jobs added. So that was definitely a miss of a report. And today, the first Friday of every month, we get the BLS report, that’s the Bureau of Labor Statistics. Expectations for the BLS was that 700,000 jobs would have been created for the month of August. Instead, we got 235,000 jobs that were created. So definitely a big miss on the employment report.

Another component that’s looked at is going to be earnings because this is kind of an indicator of maybe inflationary pressures. So weekly earnings were up by 6/10%. Normally, when you have a big miss in an employment report like we did today, the bond markets would go crazy and you’d see mortgage rates really improve but everyone has all eyes on inflation right now. And we see weekly earnings starting to increase at the rate that they are, investors are watching inflation to wait and see what’s going to happen there. But I would say kind of the idea that we all have to look at right now is what is the Federal Reserve going to do because the Federal Reserve, as I said in the beginning of this, has a meeting at the end of September, that’s usually when they really announce impactful news and the Federal Reserve was all eyes on this employment report, if it was a really strong blockbuster report, this would have given the Federal Reserve a really strong reasoning to go into this end of September meeting and really probably announce the tapering of their bond buying program but now that the employment reports, both ADP and the BLS were as weak as they were. It’s really hard to say what the Federal Reserve is going to do. And do they actually have the ammunition that they need now at the end of September to start tapering their bond buying program, I would say probably not. But that’s just my guess, we’re going to have to wait and see what happens. I’m around all weekend. I know it’s a holiday weekend. Saturday, Sunday, Monday – you got any questions? Give me a call. Call me on my cell phone, text me. Happy Labor Day weekend. Have a great day.

303.500.3839

Brianm@rate.com

Friday Market Update for the Week of August 27th 2021

Happy Friday, Brian Manning here again, with the weekly update. Let’s see how it’s going this week. So Monday this week, we had existing home sales. This is for the month of July, on a month over month basis, existing home sales were up 2%. On a year over year basis, up 1.5%. That’s just an incredibly strong report. So good to see continual strength in housing. That’s a phenomenal existing home sales report. So I was super pumped to see that and just the components of this report, first time home buyers making up 30% of all purchase transactions. So they’ve been holding strong, first time home buyers have really been in that 30% to 32% range, which is good to see.

Cash buyers still making up 23% of all transactions again. Last year, cash buyers were taking about 16% of all transactions, that’s up to 23% and holding right now. And investors moved from purchasing 14% to 15% of market share. So just a really strong really great report to see. Then we got some inventory information. Inventory is really up from the prior month at 7% but on a year over year basis, inventory is still down by 12%. So we definitely have seen some inventory challenges all year, perhaps we see a little bit of softening coming into the fall, which really wouldn’t be bad to see, I would really love to see some more inventory out there. It would be really wonderful for everyone that’s trying to buy a home. I even think there’s more buyers that could get into the market if more inventory became available. So we’ll have to wait and see what happens.

Tuesday, we got new home sales. New home sales on a month over month basis were up 1%. So still great to see strength in the new construction housing market there. Wednesday this week was the start of the Federal Reserve meeting. So the Federal Reserve meeting starts on Wednesday, leading into today, we’ll finally get some comments from Jerome Powell today, all eyes are really on the Fed right now, because they’re in the process of doing what’s called quantitative easing, and in quantitative easing they’re purchasing bonds on a monthly basis. And when they’re purchasing mortgage backed securities, not only are they purchasing bonds, but they’re also reinvesting every month.

So what that means is they have this balance sheet, and they have all these mortgage backed securities that they hold and every single month, when someone sells a home or someone refinances and the mortgage backed security that the Federal Reserve holds is getting paid off, they’re reinvesting that money as well. And right now all investors and eyes are on the Fed because we’re waiting to see what the Fed is going to do. Is the Fed going to start tapering? Are they going to announce anything regarding the tapering of bond buying? You know, if they just taper bond buying but they keep their reinvestments going on a monthly basis, that’s not really so bad, that’s going to hold rates down but if they taper out of their bond buying, and then they let their balance sheet runoff, and they don’t continue these reinvestments, that’s going to have more of an impact on interest rates. So I’m not really sure which way it’s going to go, all eyes are on the Fed today. You know, Jerome Powell has really done a good job over time of just kind of talking more to consumers and to investors. So he kind of lays it out in layman’s terms, which is really great to see on a continual basis. So I’m excited to see what he says today but all eyes are on the Fed right now.

Happy Friday. Hope you have a great day. I’m around all weekend. If you have any questions, give me a call, text me – I can run some numbers for you, help with a pre-approval,  or go through a strategic buyer consultation. I’d love to help you in any way I can. Hope you have a great day!

Friday Market Update for the Week of August 20th 2021

Happy Friday, Brian Manning here with the weekly update. We got all kinds of stuff to talk about this week. So, Monday this week actually brings us back to talking about some information last week. So we had 10 fed voting members last week sharing their opinions on tapering, starting to see everyone kind of coming in line with wanting to taper their bond buying purchase program. It’s called quantitative easing. Right now the Federal Reserve is purchasing mortgage backed securities and US Treasuries. I don’t know when the announcement is going to come out but if I had to guess I would say, Jackson Hole. So the Federal Reserve does a big meeting at the end of every September. Jerome Powell, the president of Federal Reserve will do a press conference at the end of it. So if they were going to release something in regards to tapering, that would probably be the spot, we’ll have to wait and see. But the question really is, is it a big deal? The reason why I say that is because the Federal Reserve right now, even though they’re actively purchasing mortgage backed securities and US Treasuries, they also have a very large balance sheet. And if we look at mortgages, for example, they’re still reinvesting their mortgages. What I mean by that is that when they have these mortgage backed securities on their balance sheets, when someone sells a home and their mortgage gets paid off, or they refinance and their mortgage gets paid off, the Federal Reserve is taking that money through the pay off in reinvesting and still purchasing more mortgage backed securities. So even if they taper, their active purchases and mortgage backed securities, you’re still going to see a tremendous amount of reinvestments taking place, which is going to have a continual positive impact on mortgage rates.

We also got some analysis on July employment. So when looking at job creations for the month of July, we had 943,000. But 221,000 of those jobs that were created in the month of July was actually teachers going back to work. So perhaps unfortunately, the July employment report not looking as rosy as it could. Right now in the US, we have 10 million job openings. And we have 12 million people on some version of unemployment. So the job market still needs a lot of help. There’s still a lot of positions to be filled out there. So I’m not really quite sure. Unfortunately, the job report wasn’t as rosy as it could be Wednesday this week, we got housing starts, so this is starts for new construction, and that was down 7%. If you watched the news, you look at the media, you know, they just blow this out of proportion, you know, so here’s just some info to look at. So in 2006, builders had 2 million homes for sale. Right? So there’s inventory of 2 million homes and demand was at half. Right now what we’re in is completely different. We’ll talk a little bit more about that in a second. So seeing housing starts down a little bit, I’m not really too worried about it.

Today, we get existing home sales. Existing home sales, also down a little bit. You know, continual bubble talk in the news. Is it legit? I don’t know. Let’s look at some more numbers. So 2007. At this time in 2007, there was 3.7 million homes for sale. Of that, 2 million of them or so were new construction. So we had 3.7 million homes for sale. Right now, we have 1.2 million homes for sale in the US. So there’s a 2.5 million home inventory difference between right now in 2021 and where we were in 2007. Also, if you look at households, household creations from 2007 to today are different, and we have 12 million more households in the United States that could potentially be homebuyers, compared to where we were in 2007. So purely if we’re just looking at supply and demand, we are definitely not what I would say in bubble territory. Also, we have some builders that have stopped taking on new orders. Very large national builders have announced that they’re not taking on new orders and they just need to work through the backlog of people that they’re under contract for it and build out the houses that they have.

We also got Redfin today. So Redfin today announcing that across the nation, listed homes days on market for the month of July is 15 days. That’s incredible. That means that if another home did not go in the market in 15 days, all of the inventory in United States would be absorbed. Yes, this is up but it’s only up by one day. In the month of June, days on market was only 14 days. Also Redfin telling us today that 60% of all transactions right now are multiple offer bidding wars and selling above list price.  So you have demand high, you have inventory compared to 2007 down 2.5 million homes. If you just purely look at the economics of supply and demand right there it would tell you that we’re probably not in danger of bubble territory, but that’s just my opinion. You can interpret all that for yourself.

I’m around all day I’m around all weekend. If you have any questions, let me know. If you need a pre-approval this weekend, call me on my cell phone, text me. I can help you buy a home, refinance a home in Florida, Colorado, California, Arizona. We’re going to start adding in some more states as well but any of those states, you got any questions – call me, I’d love to help you. Happy Friday. Have a great day.

Friday Market Update for the Week of August 13th 2021

Happy Friday, Brian Manning here with the weekly update. Let’s see. So Monday this week, we got some feedback on new construction. So in the first half of 2021, new construction began for 563,000 new homes across the US, this is a very high number. Still, unfortunately, not meeting the demand. But still really great to see such a high number of new home starts. Tuesday this week, we had New York Fed president talking about prediction of rents and the prediction of rents was that they will increase by about 8%. I’m not really surprised by that, because then you see such a run up in home prices and the appreciation that we’ve had over the last 12 months, certainly rents are going to catch up with that at some point in time. I mean, 8% is a pretty significant number, I’m not really sure we’re going to see it go that high. But without a doubt, if you’re a first time home buyer and you’re thinking about buying a house and you’re looking at the prices of homes right now, by now you should also be weighing in the cost of rents going up by 8% and look at the benefits of buying versus renting, because there’s definitely some significant advantages there.

Wednesday this week we got CPI. So CPI is the Consumer Price Index. It’s our favorite gauge of inflation. And we look at the core rate of CPI. So the core rate strips out volatile items such as food and energy. On a month over month basis, the core rate rose by 3/10%. On a year over year basis, so we saw the CPI number go from a 4.5% rate to 4.3%. So still running hot, and definitely higher than what the Fed had always said they wanted to see at a 2% inflation rate. But good to see it calm down a little bit. Thursday this week we got the PPI. So PPI stands for the Producer Price Index, it measures inflation at a wholesale level. Typically, this is a report that a lot of people don’t pay attention to because wholesale inflation doesn’t really come into play all that often. But right now when we see inflation running hot, more and more people are paying attention to this report. So also looking at the core level, which includes stripping out of the volatile items such as food and energy, on a year over year basis, the PPI was up 6.2%. So wholesale inflation is definitely running hot, which typically now will translate to hot retail inflation as well. So we’re going to have to keep an eye on inflation numbers and see what happens there. There’s been a lot of talk about this lately, the Federal Reserve thinks that it’s going to be transitory. Perhaps it is because really good CPI number going from 4.5% to 4.3%. But if the PPI and the wholesale level is a leading indicator, it’s something for us to keep an eye on.

Today, we got feedback on lumber prices. So lumber prices today, compared to the month of May are down 50% which seemingly would be great news for new construction and builders. The challenge that we’re going to see is that suppliers have already stocked up on lumber based on the higher prices. So if you bought lumber at a higher price, you’re definitely not going to sell it back out at a lower price just because lumber prices are down right now. So it’s kind of unsure how long it’s going to take for the 50% drop in lumber prices that we’re seeing right now at a wholesale level transfer out to our builders in new construction. Something for us to keep an eye on but it’s definitely good to see lumber prices going in the right direction. I’m around all weekend. If you have any questions let me know, I’d love to help you in any way I can. Call me, text me. Happy Friday. Have a great day.

Friday Market Update for the Week of July 30th 2021

Happy Friday, Brian Manning here with the weekly update. Let’s see. So Monday this week we got new home sales. New home sales for the month of June we’re down 6.6%. You watch the news and they’re just like, oh my gosh, the world is ending. 6.6 decline, but most builders are saying the primary reason they’ve seen the decline is because they can’t keep up with demand. In fact, DR Horton came out and said they’re going to be cutting back on sales because they can’t keep up with the demand. So not a horrible thing to see for the decline in new home sales, but there you go.

Tuesday we got Case Shiller. So Case Shiller measures appreciation on a national level. On a month over month basis for the month of May houses appreciated at 2.1%. But what’s really crazy is, on a year over year basis, houses appreciated 16.6%, I still think it’s a little hot, I wouldn’t mind seeing it cool down a little bit but 16.6% appreciation is unbelievable. Wednesday of this week and every Wednesday, we get the Mortgage Bankers Association giving us feedback on new applications. And this is new purchase application. So yes, new purchase applications were down on a week over week or month over month basis, but you know, something that people don’t pay attention to or mention is all cash sales. So if you have new purchase applications down a little bit, all cash sales are actually up 7% right now. So I wouldn’t say it’s horrible seeing a slight decline in mortgage applications when you have such an increase from 16% to 23% of all transactions being all cash. You know, there’s just a lot of talk about bubble questions right now. And I don’t know if anybody ever watched the movie The Big Short, but you remember that scene in there when the stripper is talking and the stripper is like “I have five houses, I bought them all working here”, alright 2008 was totally different than what we have right now. We had someone in The Big Short that bought five houses, got 100% financing paid, no money down, verified no income, didn’t state any income loans, everything that we’ve been doing ever since that housing crash has been totally different. So I would not say I feel like we’re in bubble range. But certainly there’s definitely a lot of talk about it.

Thursday, we had a recap from the Federal Reserve. Federal Reserve just finishing up a two day meeting and giving us feedback on what their plans are, they’re still a little ambiguous of what they want to do. Right now. they’re still purchasing mortgage backed securities and treasuries, they are purchasing just an exceptional amount of these and they’re reinvesting every single month as well. They said they don’t plan to taper probably until next year. And they also said that when they do taper, that they won’t taper disproportionately, meaning they won’t taper, you know, mortgage backed securities before US Treasuries. I’m not sure I fully believe them, I’m actually not really sure they know exactly what’s going on. We’ll have to wait and see. But there you go. We also got second quarter GDP reading. So analysts expectations for the second quarter GDP was that it would be up 9.2%. GDP ended up being up 6.5%. You know, alone 6.5% is usually a good number, but it was certainly an analysts miss, and you know, we had talked about this several months ago. We had said hey, keep an eye on GDP, as stimulus checks are going out there and people are spending stimulus checks it’s going to have a boost on the economy, it’s going to increase GDP but when the stimulus money goes away and people stop spending it, you are going to see a slight impact on GDP. So you know, it kind of looks like what we saw here. We were trying to keep up with GDP before. Analysts expectations were for a higher GDP, it came back lower than expected and I wouldn’t be surprised if it’s because you’re seeing the stimulus money kind of working its way being spent through the economy.

Today, we got the PCE, that’s the personal consumption expenditure. This is the Federal Reserve’s favorite gauge for measuring inflation. On a month over month basis, we’re really looking at just the core rate, because the core rate strips out volatile items such as food and energy, on a month over month basis for the month of June. PCE was up 4/10%, on a year over year basis, we’ve gone from 3.4% to 3.5%. So if you remember, it’s like last week, we got the CPI report. These are both gauges of inflation and you know people that pay attention to this will say, well, hey, why is the PCE a lower number of inflation compared to the CPI? The primary reason is going to be housing. So in the PCE, what we got today, only 12% of this component is based on housing, right? If rents are going up, and cost of housing are going up, 12% of the component in the PCE is based on housing, whereas the CPI, the consumer price index that we watch as well to gauge inflation, 24% is a component of housing and the CPI. So you definitely have a lot more housing in the CPI report. And we just think probably CPI is more accurate because housing is something that we’re all dealing with, it’s something we all pay for. So as you have housing costs going up, factoring that in and having a little heavier weight in the CPI report we think is a little bit more accurate.

I’m around all weekend. If you have any questions, let me know. I’d love to help you. Mortgage rates are phenomenal still. We’re helping people buy houses in amazing rates, refinance,  take cash out, remove PMI, so many different reasons. There’s still values in refinancing. If you have any questions, give us a call, text us. Happy Friday. Have a great day!

-Brian

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