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.