Happy Friday! Brian manning here with the weekly update. Let's get right to it. Monday this week relatively quiet news day. Just an anticipation of the CPI report we got on Wednesday.

But Tuesday this week, we did get Zillow's home price index. This is for the month of March. It shows that prices went up at 1%. I'm just really happy to see this. I truly think that Q4 was the low in the housing market. You know, we're starting to see consistent appreciation. Right now, we're not shattering any records, but of course, we were before, 12, 15, 18% appreciation is not sustainable, but this is definitely far from a crash in housing as the media would have predicted. So, you got to watch and be careful of the negativity in the media because they are not always correct.

Wednesday this week though, we got CPI. So, this is Consumer Price index. We kind of predicted going into this that it wasn't going to be a great report and very favorable for us. So... The headline appreciation went from 6%... I'm sorry. Headline inflation went from 6% down to 5%. We'll look at that more in a minute.

And Thursday this week, we got PPI. So, PPI stands for Producer Price Index. PPI was down as well. PPI is down at 2.7% on a year-over-year basis. You know, it was only about a year ago, PPI was at 11.7%. So, let's look at some charts here and just some information on this to really better educate you on what we're looking at as far as appreciation... I'm sorry, inflation is concerned. I got housing appreciation on my mind.

So, this is for the month of March. This is Consumer Price Index. So... So, the headline number went from 6% down to 5%. So, that's really good to see and that's definitely an incredible decline in inflation. But the core rate, and this is kind of what we predicted, went from 5.5% to 5.6%. So... The core rate is what the Federal Reserve looks at.

The reason why this is the focus for the Federal Reserve is because the headline rate includes volatile items, whereas the core rate strips out volatile items such as food and energy costs. And Federal Reserve and their hiking or lowering of interest rates is going to impact costs associated with the core rate. No matter what the Federal Reserve does, no matter how much they hike rates, they're never going to impact oil costs, they're never going to impact Opec production.

So, they're focused on the core rate. But again, this is a rolling 12-month number that we look at. So, we're replacing the number from March of 2022 with the number we got in March of 2023. What's exciting is, we talked about this, looking at the report that's going to come out on May 10th for the month of April. I think that really, we're going to start seeing significant movement in inflation.

The other thing here is the shelter cost. We've talked about this in the past. Shelter makes up 43% of the CPI and shelter went from 8.2% to 8.1%. So, not a large decline there. But looking at lodging away, this is good to see a decline. Lodging away was at 2.7%. So, we're starting to see a little bit of movement there. But what's important for us to really pay attention to, we've talked about this in the past, is that shelter makes up 43% of the CPI report. That's extremely impactful on inflation. It's because they're looking at leases that were signed year ago and we haven't been sure when, but we've been assuming right around nowish, we're going to start to see the cresting of shelter.

So... If we're looking at the shelter costs right now, it looks like we're probably starting to see them come down. And when shelter costs come down on a consistent basis, that's going to be extremely impactful on the Consumer Price Index report. It's going to be extremely impactful on inflation and mortgage rates are going to come down. So, it's good to see this.

We need to get another report in here, but I truly think the April reading that we're going to get on May 10th is going to show a continued decline in shelter costs and that's going to be very inflation-friendly for us.

Looking at overall inflation, we had airline fares, they make up 1% of inflation. They were at 4% on a month-over-month basis. But, you know, this originally was at 26.5%, it's down to 17.7%. So, we're starting to see some decline there. Another good impact is on vehicles. They were down 11.2%, which is good to see. You know, it's not common that you buy a vehicle and you can sell a used vehicle for more than a new vehicle. So, everything seems to be sorting itself out here really nicely, which is great to see.

Another item we want to look at was the report we got on Thursday. It's for Producer Price index. So, PPI measures inflation on the wholesale level. So... When you look at PPI, it doesn't necessarily have to, but typically... when the cost of goods in a wholesale level goes down, on the retail level, it could get passed on to the consumer and it doesn't have to. On the retail level, they don't have to lower their prices if they want to. But... If you look at what's going on, typically... this red line right here is PPI. Typically, the CPI number... So, the inflation that we're experiencing as consumers will follow suit of PPI. So... So, PPI at one point in time was almost up at 12%. That's down significantly to like 2.7%. That's an incredible decline in inflation right there. And we're starting to see the CPI number roll over as well.

So... So, what does this really mean? This just means that going forward in this year, May, June, July, all the way through the end of the year, you're probably going to continue to see rates move lower, which is incredible. And looking at, you know, potential recession in front of us, if you look at housing and you look at interest rates, housing and interest rates always do well in a recession.

So, again, I truly think the low the housing market was Q4. I think there's still a lack of inventory out there. I think, you know.. I don't think the inventory problem is going to fix itself anytime soon, and especially as mortgage rates come down and more and more buyers jump into the marketplace, it's going to make it even more of a struggle and you're going to see appreciation move back up.

I don't think we're going to be 15, 18% appreciation like we were before, but I'm telling you, if you're thinking about buying a home, right now is the time to do it. You can always refinance in the future, but as rates come down and more buyers jump back in and inventory remains at a very low level, there's just going to be a pure imbalance of supply and demand. Let's see. Not much to report for today, for Friday. I'm around all weekend. If you have any questions, let me know. If you want to learn how we're closing purchase transactions in 10 days, give me a call. I'd love to help you. Happy Friday. Have a great day.

-Brian

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