Friday Market Update: October 28th 2022

SO….When will mortgage rates drop? 

Happy Friday! Brian Manning here with the weekly update. Before we get to the update, two quick things. One, I have a new email address. This is my go-to email address for everything. Please update your contact info, the email address is part of this email here. Very important and please do that.

Second thing, eighth annual Fall Fiesta is coming up on Thursday, November 10th. We’re super excited. It is actually about to sell out. We will be closing RSVPs. If you want to come out for a great evening and support a wonderful non-profit community… sorry, conscious alliance, please make sure to RSVP because they will get closed out. Now, Friday market update. Let’s get right to it.

So, Monday, relatively quiet news day. Not a lot to talk about there. Tuesday this week, we got Case-Shiller. Case-Shiller giving us feedback on home appreciation. On a year-over-year basis, this is for the month of August, appreciation is up 13%. Definitely, coming down from all-time highs. Not surprised to see this number going down. 13% is still a great number, but definitely not surprised to see that we’re at that number right now.

Also, we got Mortgage Bankers Association, their predictions of the economy going into a recession in Q1 or Q2 of this upcoming year. Recessions are almost always real estate friendly. If you also look at their prediction, because of the recession we’re going to go into, they also predict that mortgage rates are going to move down to 5%. We’ve been talking about this a lot in the past. We are very much in line with what their prediction is, especially on mortgage rates.

Wednesday this week, we had Ohio Senator Sherrod Brown send a letter off to Jerome Powell. The purpose of his letter was really just to tell Jerome Powell, hey, we really think the Federal Reserve is just hiking race too much. We think that there’s going to be long-lasting damage. And instead of looking forward to what the impacts of these rate hikes are going to be, you’re looking backwards at data and we just really think you’re going too far. It’s interesting now.

So, now, we have two Fed members that came out last week that said, hey, it’s time to start questioning our Fed rate hike approach. Now, you have an Ohio senator reaching out to them. So… I kind of wonder what’s going to happen in this November meeting coming up with the Federal Reserve. We already know they’re going to hike rates three quarters of percent in this November meeting. But the question is going to be, do they throw out there and allude that the next meeting they might consider a half a percent rate hike. At some point in time, you’re going to see a little bit of caution there. So, we have to watch that one very closely. That’s what everyone’s going to be looking for.

We also got new home sales for the month of September. New home sales were down 11%. Kind of in line with what we expected to see and I’m just also not surprised to see some calming in new homes in the market as well. Today, we get the PCE. So, PCE is the personal consumption expenditure. This is the Federal Reserve’s favorite gauge for measuring inflation. We look at the core rate because the core rate strips out volatile items such as food and energy. This is for the month of September. Core rate for inflation in the month of September went up from 4.9% to 5.1%. Pretty much in line with expectations.

Actually, expectations were that this would go up to 5.2% and August was actually revised a little bit lower as well. We’ve talked about this in the past. I really think we’re going to see inflation start to cool here in the future. One of the reasons why I said this is because when you look at housing as part of inflation, the housing costs and rents are not calculated into this inflation number every single month. They’re calculated in around every six months. So, in January, when we start getting more and more inflation data and we start to see some softening in the housing market, that’s also going to help us on inflation as well. So, we really, truly think we’re going to start to see inflation start to come down.

As inflation starts to come down, that’s going to be a positive impact on interest rates and then, we’re going to see mortgage rates move as well. So, we’ll keep an eye on that. And of course, I’ll keep you updated every Friday of what’s going on. I’m around all weekend. If you have any questions, let me know. Call me on my cell phone, shoot me a text. Again, new email address. Make sure you update it everywhere and I hope to see everyone November 10th at Fall Fiesta. Have a great day.



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