Good morning to Summertime;
Residential Lending
Spring – The Season of Preparation and Buying.
Call us. Call now.
As a mortgage broker, we play a crucial role in crafting creative solutions, bridging valuation gap, and addressing today’s unique financing challenges.
Top of the list: Jerome Powell. At this weeks Federal Reserve Board we read another guarded statement: “But for now, recent growth in employment and spending indicate a healthy economy, albeit one shrouded in some very downbeat sentiment. He was referencing record-low consumer optimism and unknown impacts from tariffs. For this he wants to wait. Right or not, it’s Powell.
Many believe its just one more political head-fake. Trying to say yes to rate cuts, but offering weak excuses to do nothing. Great way to keep their track record intact – 100% of doing something, but late. Late coming out of CoVid, resulted in 8 % interest rates and a 40-Yr high water mark for inflation. This should not have happened. Real issue, downbeat sentiment.
Important Points:
1) Interest Rates: Chopping sideways seems the appropriate term, telling Congress: Cut spending.
Best advice: Make this month your month to prepare.
Spring Buyers are calling. WE can show you how
to buy now and enjoy rate cuts later. CALL!
2) Economy:
A) Economic Activity: GDP: Q1 down -0.3 %. This is the first negative in 3 years. PCE: Overall and core numbers flat: 2.2 % and 2.6 %, respectively. Good news. Interestingly personal spending is up, wages are up, and savings rate is up. A good combination.
B) Employment: Wages holding steady and up about 4 % year-over-year. Consumer sentiment continues trending downward, as savings rates are up. Net wages finally catching up with wages lost to inflation. Sadly, Fed members are using this as an excuse to not cut rates.
Our expectations: Future 50 % downward revisions to the number of jobs added, to continue. Why so? Because the BLS (Bureau of Labor Statistics) track record tends to overstate. Recent downward revisions: February and March down 58,000 jobs. This amounts to 1/3 reduction in the original February jobs created number. Other benchmark reviews have, in the past, revised even lower to a net 50 % of what was original published.
Extended unemployment – measured over 6 month time – worsened from 1 out of every 5 not finding a job, to now 1 out of 4. Median duration increased to just over 10 weeks. These numbers do not support the improved job report of last Friday. They do support a rate cut.
3) Residential Real Estate: Active listings – not those in contract – from 2016 until Covid, the annual number was moving lower, gradually. After CoVid, the number of active listings cratered. Since summer of 2022, home listings have again risen. Yet, current numbers are still about 75%, pre-CoVid. For perspective, prior to CoVid, the market was flat out HOT.
In the Headlines: Headlines report housing inventory up 30 % year-over-year. What is not said: 1) pre-CoVid levels were 16 % higher and 2) these hard numbers, fail to consider the increased demand due to increased population – up 12 M people.
Good news:
We are well equipped to help Buyers
and those wanting to start now. Call us.
4) Commercial Real Estate: Excellent investment opportunities are at hand. Call now. Let’s start preparing now. Gain the upper hand. Call today. Let’s start.
Key market number to watch: Recent headlines declare a faltering in apartment vacancy rates. Yet, actual occupancy is back up to 2016 and 2017 levels, without CoVid stimulus money or rules of occupancy. Current numbers are a bit below 2018-CoVid.
5) Inflation Perspective: Numbers are softening. Outcomes from high interest rates driven by high inflation, excessive deficit spending, and a Federal Reserve late to the game. We should continue to expect inflation numbers to soften, but without cuts in spending by Congress, Powell and the Fed my continue to be stubborn.
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Note: Tariffs are headlines without understanding. Consumers define the price points that clears the market. Prices moving to high leads to prices being reduced as profit margins shrink to facilitate sales. As companies swallow the tariffs; 1) Increases in US manufacturing will increase and secure future supply. 2) Falling energy costs will cut shipping costs and inflation. 3) Tariffs will help decrease US deficit and help lower rates. 4) Level the playing field, so we can be more competitive in foreign markets.
Good News:
Recent bond and treasury auctions are positive actions – a strong counter-point to all the talk that speaks against the US economy. Add to this, recent auctions showing continued strong international investment.
My Perspective:
Recession or Not: Headlines speak to a recession being just around the corner. Let’s consider an interesting statistic from Elliot Eisenberg: The Conference Board’s index of “leading” economic indicators turned negative – Y-o-Y – under Biden. Key is when weakness in our “leading” economic indicators spreads throughout “co-incident” economic indicators. Outcome: A recession is close. Sadly, the Federal Reserve is again, slow at-the-wheel of monetary policy. This ratio of leading-to-”co-incident” indicators is below 0.9. Dating back to 1975 when below 0.93 a recession follows.
This is a great market where a steady hand is needed. Opportunities abound. The care is needed to seek potentials. We are in a potential season of an event driven recession (tariff’s) and I do say IF. This type of recession is historically the shortest of duration and the shallowest.
QUESTION: Buy Now or Wait for Lower Rates
California market: Homebuyers yet on the sidelines, typically wait for a drop in interest rates. Others want more choices and alternatives. Interestingly, Mom and Pop investment property owners (3 – 10 doors) are continuing to increase holdings, roughly doubling the market share of purchases. As for renters, they too like choices and will often live in the most preferable circumstances they can afford – many seeking SFR or duplexes, not apartments. M&P serve this market the most, not Blackstones, as we often read in the headlines.
Property appreciation: Limited number of homes for sale, plus too few “new” homes under construction. This leaves an imbalance of supply vs. demand. Outcome: One can anticipate continued property appreciation. Question: Found your dream home – Buy now or wait for lower rates? We can show you how to buy today, and take advantage of lower rates, later.
Is this your dilemma? Let’s talk. Don’t lose the home and location you desire. Here’s what we offer. We develop a detailed analysis and build a mortgage-options plan custom fit to your family finances. We show you how to take advantage of lower rates, if they happen.
Sound good? Call. Let’s analyze the cost of waiting vs buying, now. This is a benefit few in the mortgage world are able – or willing – to provide. Few will take this extra step. I do, because I care about your today and tomorrow. I look forward to hearing from you.
Call Today. Or, at your convenience, set a time for first conversation, on my website.
Keep in control !
More Good News – What we Do!
This month we will spotlight another option we extend to our client. A common and yet un-common retirement plan utilizes a reverse mortgage. A recent friend and client elected to move to another State and into retirement. Not quite enough to pay cash for the next home so we used a reverse mortgage to provide a payment free new home. Not the common solution.
Have an idea not easy to pursue – Call us. We love to have conversations to flush out every potential method so you have the most to choose from.
“It starts with our first conversation”
Preparing for your tomorrow
Let’s start today.
With all the financial talk, we look forward to being an open forum where you can talk through questions, thoughts and solutions. All in the name of what is best for you.
And what is most important: Those we have around us. Be well and be safe! Enjoy your family and friends, with thankfulness and gratitude.
