First Team’s Weekly Mortgage Watch (July 1st, 2018) This Week Highlights The Following Updates:
- Mortgage rates remained mostly flat last week, with economic data that reinforced the idea that we continue forward with slow, solid growth.
- Consumer Confidence slid backward but remained in positive territory. New Home Sales stepped upward, but overall construction continues to be below what most experts believe would be “normal activity.”
- GDP for the first quarter was adjusted down to 2.0%, and inflationary data continues to remain around the Fed’s so-called “speed limit.”
- This week starts with the ISM Manufacturing Index. While it and its sister services index are expected to take a small step downward, they both will remain at a level considered solid growth.
- Minutes from the last Fed meeting are also due, and analysts may be more sensitive to indications of slowing growth, which would press rates downward.
- The monthly employment data is also released, and with unemployment at 3.8%, we’re likely to hear more chatter about how that indicator may not be as reflective of the employment situation as the economics of modern labor have morphed.
You’ll Never Know Without Getting Expert Help
A recent survey by Rent Café revealed that 83% of renters are living in what they consider a “less than ideal” location. While most renters indicate that moving to a more ideal home would cost more than four times what they are willing to pay, few look at creative options for buying a home in a more desirable area. Given the low level of understanding regarding down payment and financing options, renters may be able to buy rather than continue to rent.
First Team’s Weekly Mortgage Watch (June 24th, 2018) This Week Highlights The Following Updates:
- Last week saw mortgage rates wobble about with no clear direction. Housing data revealed that builders are still very optimistic but continue to remain cautious as they slowly increase the number of permits that they pull.
- Existing home sales slipped back for the second month, but inventory levels did step upward again. Additionally, home price acceleration is showing some signs of slowing.
- The LEI did increase by 0.2%, the smallest increase in eight months.
- This week may feature some strong debate about the relative health of the overall economy.
- The final estimate for Q1 GDP is due, with expectations of no change to its 2.2% rate. While the overall economy remains strong, the debate continues as to whether it is growing faster.
- Since the beginning of the recovery, an annual GDP of 2.9% in 2015 was the best.
- Any adjustments downward in GDP make it slightly harder to hit that 3.0% mark and could help mortgage rates remain low. Even with little political drama to sway rates last week, doesn’t mean we won’t see more this drama week.
Affordability Continues To Decline
According to data released by ATTOM Data Solutions, median home prices in the US have risen 75% since the beginning of 2012. During the same period of time, wages growth has only increased by 13%. Historically, an average earner would need to spend 29.6% of their income on housing. Now, that same earner would need to spend 31.2%. Many experts are concerned that increasing mortgage rates will continue to push this trend, stressing home affordability.
First Team’s Weekly Mortgage Watch (May 28th, 2018) This Week Highlights The Following Updates:
- While headlines proclaimed rising mortgage rates, last week ended with rates trending downward with money moving into US bond markets.
- A round of political drama in Italy, uncertainty about the US-North Korean summit, and a Fed that seems comfortable with its current path all contributed to easing in mortgage rates.
- The latest minutes from the Fed revealed some uncertainty as to whether inflation will remain close to 2%, and even if it does go over, the Fed appears to be willing to let it ride for a period of time.
- Housing news was unfortunately weak, with tight inventories, increasing prices, and upward trending mortgage rates all contributing to fewer new or existing home sales.
- If the various international challenges aren’t enough drama for rates, this week’s slate of massively critical economic reports will be. We’ll get insights into consumer moods, inflation, jobs, and last quarter’s GDP.
- With the economy currently appearing to be running near its “potential,” a week of weak economic reports, coupled with more international uncertainty, could bring rates back down.
Best Markets For Flippers
With home flipping coming back into vogue and home-flipping activity hitting an 11-year high, an analysis of data reveals that Nashville, TN is the hottest market for flippers. Music City, USA saw 4.1% of total home sales were homes that were flipped for an average profit of $87,200! Fresno, CA, Palm Bay, FL, North Port, FL, and Baton Rouge, LA rounded out the top five. However, number seven, Los Angeles shows a top average profit of $169,400 per flip!
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FIRST TEAM’S WEEKLY MORTGAGE WATCH (MARCH 25TH, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- Mortgage rates may be moving back into neutral after last week’s meeting of the Federal Reserve.
- As expected, the Fed raised its interest rates which had little impact on mortgage rates.
- The bigger news from the gathering was that the Fed Governors’ predictions continue to show a split on how many rate increases to expect this year. Markets are now betting on only two more rate increases this year.
- While the economy started 2018 with a bang, it appears to have significantly decelerated, potentially to under 2%. This makes the probability of inflationary flare-ups less likely and could help keep rates flat for a while.
- However, even if the economy does shift into a lower gear, the potential of a trade war, with China scaling back US Treasury purchases, could push interest rates upward.
- Final GDP numbers for the last quarter of 2017 are due this week. With the reduced concerns around accelerating growth, a reading of less than 2.2% could help push mortgage rates downward.
- However, political news could push rates either way, especially if we see more threats of a trade war.
ADULTING IS INHIBITING HOUSING FOR YOUNGER FOLKS
According to the latest from Freddie Mac, the housing market is being held back to some degree by the financial challenges facing younger generations. Since 2000, young adults’ average annual expenditure has climbed by 36%, with both housing and healthcare more than doubling. Add in skyrocketing education costs and debt, coupled with lower labor market participation rates, and young people are having a more challenging time accessing the housing market.
FIRST TEAM’S WEEKLY MORTGAGE WATCH (MARCH 4TH, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- While rates stepped higher again last week, they spent part of the week looking as if they might drive even further upward.
- In his first testimony to Congress, the new Fed Chair, Jay Powell, expressed that he is increasingly optimistic that the US economy will continue to experience strong growth, and that he is confident that inflation will hit the Fed’s target level relatively soon.
- Coupling this with a strong reading from the ISM Manufacturing Index, and Consumer Confidence returning to levels not seen since 2000, rates could have moved even higher.
- However, comments from the President about the potential of starting a trade war dampened market enthusiasm in both stocks and bonds.
- This week could end up focused on the potential for a trade war. The likely result of one could be higher prices.
- As markets are already concerned about inflation, the more aggressive stance that the US takes against imports, the more likely that rates may rise. However, if the details are less aggressive than feared, rates might retreat. Of course, a strong employment report could change that.
HOME PRICES PASS HISTORIC PEAK LEVELS
In the third quarter of last year, average home prices passed their peak level from 2006. The Great Recession saw home prices across the nation fall by an average 33%. However, the rebound is not evenly distributed. Illinois, Nevada, Florida, and Arizona still remain below their historic highs, and almost 2.5 million homes are still underwater. Other states faired better, like North Dakota which only dropped 2% during the recession and is now up 48% since 2006. > Historic Peak Levels
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FIRST TEAM’S WEEKLY MORTGAGE WATCH (JANUARY 28TH, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- Market momentum and positive economic news continue to press interest rates higher, with little relief on the horizon.
- While the first GDP estimate for the final quarter of 2017 did come in at 2.6%, which was lower than expected, markets shrugged it off.
- We still have two more estimates before the final reading, and other economic data point to upward revisions in the offing.
- Inflation data in the GDP report also point to firming pressures that may push the Fed to more rate increases this year.
- This week is jam-packed with economic news and data.
- Changes in language are expected in the Fed’s policy statement that would push odds of a March rate hike to near 100%.
- While chances of an increase this month are low, an unexpected hike by the Fed would certainly drive all interest rates even higher.
- The ISM Manufacturing Index is expected to slip, but as long as the slip is less than 1.0 point, the impact will be muted.
- Friday’s Employment report could easily send rates even higher if November’s new jobs number is adjusted upward and December’s comes in over 180,000.
ARE OLD BUILDINGS WORTH PROTECTING?
The January 10th demolition in Whitefish, MT of a building designed by architecture legend, Frank Lloyd Wright, highlights the tension between owners and preservationists. The tension often balances between the rights of owners, perceived historical value, potential market value of the land upon which the building sits, and the cost of maintaining or renovating. Unbeknownst to many, even a building on the National Register of Historic Places can be demolished.
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FIRST TEAM’S WEEKLY MORTGAGE WATCH (JANUARY 21ST, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- Mortgage rates continue to move upward as the third-longest economic expansion on record powers along.
- With global economies also growing, major interest rates are all trending upward.
- Last week, average 30-year mortgage rates stepped over 4%.
- The cold winter weather helped propel Industrial Production numbers higher than expected, and weekly jobless claims fell to a 45-year low.
- Market sentiment remains on the positive side, with equities on a march to set new high after new high.
- With the long-held axiom that markets hate uncertainty, one might believe that the government shutdown would hurt equities, drive more cash into the relative security of treasuries, and pull rates downward. However, it appears that markets have simply accepted that Washington is dysfunctional.
- Should the week’s economic news prove to be positive, we are very likely to see rates continuing to step upward. This would be especially true if Congress can get a deal in place to fund and reopen the government, and especially true if the week ends with GDP coming in over 3.0%.
FORECLOSURE RATES ARE DOWN
Across the US, the foreclosure rate has been steadily heading downward. On a national basis, the foreclosure filings, which include default notices, scheduled auctions, and bank repossessions dropped to a 12-year low. In 2017, only 676,535 properties faced foreclosure, compared to almost 3 million in 2010.
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FIRST TEAM’S WEEKLY MORTGAGE WATCH (JANUARY 14TH, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- Mortgage rates moved upward last week.
- Economic news continues to point toward solid economic growth both here and abroad, with some signs that inflation may finally be taking hold.
- Retail Sales grew 0.4%, right in alignment with expectations.
- While both the Consumer and Producer Price Indices’ headline numbers were soft, the core readings revealed some increasing price pressures.
- International news also pressured rates upward. The European Central Bank has tagged September as the end of their quantitative easing program, and Japan is showing signs of ending its long program of holding rates at zero.
- Markets got a little spooked when news broke that China, the world’s largest investor in US treasuries, was considering trimming its purchases. Chinese officials denied the news.
- This week would easily see rates continuing to march slowly upward, especially if we see Industrial Production numbers beat predictions.
- Additionally, if weekly jobless claims drop back below 250K, easing labor market concerns, mortgage rates will feel even more pressure to climb higher.
SOCIETAL OCD KICKING IN THE KITCHEN
The 2018 U.S. Houzz Kitchen Trends Survey revealed that the number one priority in the kitchen is storage. While we love our kitchen gadgets, tools, and appliances, clutter in the kitchen seems to be driving us crazy. The growth in sales of recycling baskets, cookie sheet organizers, revolving corner trays, drawer organizers, and pull-out or swing-out trays and shelves supports these results. Runners-up for kitchen priorities include easy-to-work in, entertain in, and clean.
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FIRST TEAM’S WEEKLY MORTGAGE WATCH (JANUARY 7TH, 2018) THIS WEEK HIGHLIGHTS THE FOLLOWING UPDATES:
- Mortgage rates launched into 2018 with a small dip. Despite another week of mostly positive economic data, rising stock markets, and many other interest rates moving upward, mortgage rates moved slightly downward.
- While much hay was made over the under-expectations employment report, the sub-par 148,000 new jobs number will likely be revised higher in the coming months, as December’s data is often incomplete.
- The ISM reports split direction with manufacturing surging ahead and services cooling. Both remain well on the “expansion” side of their equations.
- Some of the trepidation of raising mortgage rates may have come from the minutes of the last Fed meeting.
- There was ample concern about how the tax bill may impact the economy, which adds to future uncertainty.
- This week is likely to see rates working to move upward. However, the lack of growing inflationary pressure seems to be significantly helping hold rates in check.
- If the Producer and Consumer Price Indices reveal another month of non-threatening prices increases, rates could even dip slightly.
FINDING YOUR PERFECT WORK-LIFE BALANCE
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