Good morning to helpful facts about our economy – finally;
Residential Lending
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Great News:
Home loan rates are solidly in the 6’s
Plenty of news about refinancing home loans.
Prepare today for a better tomorrow.
Let’s jump in:
1) Interest rates: A nice move lower.
Last week’s employment and economy numbers were as expected. Yet we witness another round of adjustments – all downwards – jobs, job openings, even inflation numbers.
A lot of talk, including me, about the overstatement of job creations in the BLS monthly reports, as the corrections occur with the QCEW quarterly updates. Common response: Historically the BLS will over-swing in both directions. When our economy is slowing, they tend to overshoot job creations. When improving, they undershoot the reported number far below the actual. Politics?
This may explain why Main Stream Media (MSM) honks on the initial headlines, yet often ignore the actual markets – when corrected. Actual markets often respond when first reported, yet often over react when the hard data is made known. Hoodwinked again.
2) Economy:
A) Economic Activity: Today’s Fed’s Beige Book covering economic activity from mid-July through August, will not be a best seller. Quick Summary: Three months ago, 10 of the Fed districts exhibited growth, two recorded “flat or declining activity.” Six weeks ago, seven Fed districts showed growth, five recorded no growth or declining growth. Now, just three districts saw growth, while nine were, at best, flat. This trend – best to watch trends – is quite disturbing.
B) Unemployment: How weak? For those seeking full-time employment, it is tougher. We have to go back to the hard-landing 2007 recession, to match this. For folks of recent history – we peaked at 10 %, with a near a straight line decrease, to 3.4 % – prior to Covid. Thus, for much of the last 8 years, we had higher unemployment, than now.
3) Residential Real Estate: In the past, we have talked about pent up demand – individuals living with their parents as they seek to move out to buy or rent. Currently, the share of people age 25-35, at home with their parents, is 17% – highest since 1940! In 2010, the share was 15%. It accurately portended new demand and a stronger housing market. What’s the point: When rates begin and continue to fall, this pent up demand will show itself. This will create more interest, more buying activity, likely driving home prices higher. Prepare today. CALL!
4) Commercial Real Estate: Financing continues to be very tight. My take – there is a lot of ‘coming soon’ projects that may become “stop”. My cautious nature sees problems with a need for professional counsel for the sake of long-term, proven options and solutions. Why? Lending criteria is now biased towards the ultra-conservative, looking deeper into the quality of actual sales, leases, and maturities. Such unknowns tend to spook underwriters and credit managers.
4) Jobs: A lot being said about the unemployment rate ‘dropping’ from 4.3 to 4.2 %. Sigh, the real numbers are: 4.251 % to 4.221 %.. Sorry, I call this a rounding error and not a move in the labor market.
Inflation Perspective: Perhaps a key reason for poor consumer sentiment has been lasting prices from the recent inflation and its impact. A cumulative effect since 2021. Question: Wages vs inflation. Real wages fell behind in 2021 and 2022. Yet for the past two years, average wages have been gaining on inflation. On average, real wages are finally higher, than pre-pandemic.
Good News:
Even with all the craziness, our successes continue. Why? Our deep pool of lending partners. They work with us to help find workable solutions. This allows us to move forward with a sense of certainty in closing the deal. The benefit of proven experience and know how!
Side-Light 1: The Good News: We are more just mortgages. You can turn to us of for: 1) Reverse 1031 Exchange – lower bank rates and private money, 2) Bridge loans – buy before you sell, 3) Cross Collateral loans – qualify on a replacement property loan, not the entire cross loan, 4) Irrevocable trusts – lower bank rates and private money, 5) have RSU’s with a private company – bank rate loans, 6) new residence loan qualification – without counting the departing residence debt, 7) Asset utilization loan – both depletion (as if income) and a no income, no debt service big bank account covers it all for owner-occupied and non-owner occupied and cash out, 8) 1-year profit and loss income-expense statement to income qualify.
Side-Light 2: We are part of an investment group representing high-end properties – on the water, sea-front, lake and more. We do this by providing “fractional” investment. With this, we are seeking those having a property that fits this description – one you no longer need 365 days a year. Sound interesting? Perhaps, instead, you are seeking this kind of get-a-way, with the benefit of not having to support 365 days a year? We have solutions. Call Today.
Side-Light 3: For investors seeking an ‘easier’ lending path, we have lending options. Benefit: They cover most States, whereby we use only the subject properties income stream to qualify for the loan. Take your good credit and document assets – no tax returns or P&L’s – and purchase 1 – 9 unit properties. Want to know more, let’s talk. Give me a call.
Good News: We have great lending partners. They respect our work and attention to detail. This is good news for you, as they trust our approach and loan packages. In response, we carefully strive to maintain the quality of their depository relationships. This is called team chemistry and is what makes our lending relationship, a winner. Join our team, today
You have heard me say:
It starts with a first conversation.
Let’s talk. Preparing for tomorrow, today.
With all the financial talk, the most important part is those we have around us. Be well and be safe! Most important: Enjoy your family and friends.