Market Update- Rates, Listings, appreciation, buy now pay later, and jobless claims

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. And also reminder, happy Mother's Day to all the mothers out there. And remember to say thank you to your mother this Sunday the 12th. So hopefully Britt has a great time. If you do need anything, we'll be available. Got a couple of soccer games with the girls tomorrow morning. And then heading out for a little bit on Sunday, but I have my phone on me. So if you do need somebody getting pre-approved or an offer letter going out, just let me know. Still happy to help. Interest rates finally moving down a little bit for us from 7.37% to 7.15% according to Mortgage News Daily. And as a reminder, this is an average of lenders across the country for the top tier conventional loan scenarios on purchases. So each individual scenario might be different, could be lower, could be higher, But it's a great indication for where rates are going overall to follow the trend. As far as the weekly mortgage tip, wanted to talk about VA non-allowable fees. This is something that often comes up, especially when writing an offer. You have that checkbox which says seller will or will not pay the VA non-allowable fees. And the tricky part is it is that that doesn't really give you an exact dollar amount and is also a question of Well, if you're asking for seller credit, let's say $10,000, and it says the VA non-allowables will be paid by the seller, does that mean it's $10,000 plus the VA non-allowables, or does the $10,000 go towards it? Unfortunately, there's no clear agreed-upon universal answer, and I've heard it interpreted differently even within the same company before. So my recommendation, at least just a practical step, is to always mark that the seller will not pay them. And then if you want to ask for seller credit, just say that, hey, you know, I've seen a lot of agents that say seller will pay seller credit of XYZ towards buyer's prepaids, closing costs, and VA non-allowables. That way everybody's agreed upon exactly what that is. But what are VA non-allowable fees? Well, VA specifically says there are certain fees the buyer is not allowed to pay under any circumstances. Most notably, a lot of people came into realization of this with buyer agent commission fees with the NAR settlement coming out. But included in this are lender underwriting fees, processing fees, and application fees, which a lot of lenders will have. And that can be anywhere from the tune of $800 to $2,000. And so depending on your lender, that could change how much those fees are. The most common one though, since as you know, a company Advantage Mortgage, we don't have any of those fees, The most common one is going to be the buyer's half of the escrow fee, or the settlement fee, put another way. And so that's going to be determined by the price, but usually somewhere between $800 to $1,200. So again, there's a lot of ambiguity there, and just having a blanket check that says the seller will pay it, they don't even necessarily know what they're going to be paying until the time of closing. So make it simple and, you know, just make sure everybody's on the same page there. Next up, as far as news goes, Realtor.com showed active listings increased from 695,000 in March to 734,000 in April, so a good uptick, 5.7% month over month and up 30.4% year over year, and this is great news. New listings also rose 9.2% to 432,000, which is the largest increase since July of 2022. And this increase is good because there's been a lot of pent-up demand even with rates being higher. And as we've often seen, whether rates are high, low in the last couple of years, more inventory has almost always translated to more sales. Because you've got people that have availability, whether they're looking for something in a higher price range or lower price range, more homes means more options. More options means more opportunities for buyers. So great to see that happening. Next up, CoreLogic and Black Knight both reported home appreciation. So we talked about Case-Shiller and FHFA last week. This week, CoreLogic and Black Knight, they both came in showing homes up the same number, 1.2% in the month of March alone. Year over year, CoreLogic is up 5.3% and Black Knight's up 5.6%. And this is something that I posted recently about my, on my Facebook page, which by the way, if we're not friends on Facebook, you're not following, check that out. I often post some great content to be able to share with your clients and ways to think about and include in your conversations that help get clients off the wall, converted, moving forward in these markets. But one thing they talked about was the difference between price cuts and price drops. So you see home prices coming down, and a lot of people are looking online to say, oh, well, I see these price cuts all the time, it must mean the market's dropping. The difference though is that If I have a home for $400,000 that I bought last year, and this year I list it for $450,000, but I dropped the price to $430,000, it doesn't mean that the value of the home dropped. It means it just priced too high, but the value actually increased $30,000 from when I bought it. And that's the thing that a lot of consumers don't see. So make sure you're educating your clients. Nationally, home prices are still going up significantly here, over 5%. So that same $400,000 home last year going up 5% in value, it's $20,000 it's gone up. So if it's listed again at $450,000 and it drops to $420,000, it doesn't mean the value dropped $30,000. It means it increased $20,000 since last year. So again, educate your clients on this, help get them off the fence. And yeah, don't want to, don't want to be behind the 8-ball with value still going up like that. Next up, the buy now pay later programs. Seeing increasing default rates here. And Bank of America said that they've got about 5.865 million, so basically 5.9 million of their customers using these programs. And about 345,000 of them use it 20 times or more per month, what they call heavy use users. And a Bloomberg study showed 43% of those who owe money on buy now pay later programs are behind on their payments. 43%. 50% of those in the survey said that they bought more than they can afford, and a third said they turned to these programs after already maxing out their credit cards. We've been starting to see car loan defaults increasing, credit card defaults increasing, now buy now pay later defaults increasing. Just further evidence that people are getting tapped out. And you gotta wonder, I mean, we've seen this increased spending in the inflation data, you know, a consumer sentiment's still high there. And so when will it end? I mean, people are turning to these maybe as a last resort. Obviously their savings from after COVID have dried up. And so just something to really watch moving forward as these default rates creep up. I mean, again, luckily it seems like mortgage defaults haven't changed enough. They've gone down a little bit. Could be a lot of people just protecting those lower interest rates that they've had from a few years ago, not wanting to be in a position to have to give those up. And lastly, initial jobless claims. Rose for the first time in a while, 22,000 to 231,000, a breakout after we've had nearly 9, 10 weeks or so of virtually identical numbers. Continuing claims also rose by 17,000 to 1.785 million. So not huge number changes, but it is interesting to at least see some kind of a change after being basically identical week over week for a significant period of time now. So again, hopefully you have a fantastic weekend. If there's anything you need, let me know, and we'll see you next week. Take care.