Market Update - Rates, PPI Inflation, Fed Rate Cut Talk, Appreciation, ADP Jobs, and National Rents

Good morning and happy Friday, last day of the month here, business day anyway, for February. Jordan Keck, your lender buddy, with your weekly market update. Interest rates here this week coming in a little bit lower again, 6.05% last week, coming in at 6.00% flat this week. And yesterday was even a little lower. We hit 5.99. Looking at the market today, we might see another improvement. And my guess is we dip back into the 5s a little bit again here in this coming week. Seen some good improvements there and a lot of momentum. If you haven't already felt it, I'm feeling it. I'm seeing a lot of the market statistics showing increases in activity, increases in price appreciation as well. And mortgage applications as well, all picking up because of that. Wanted to go through our weekly mortgage tip here about the FHA flip rule. Now, because of the way the pricing has been, I've seen a lot of clients even with pretty decent credit scores that end up getting better deals in FHA than on conventional. So I wanted to remember or kind of revise the FHA flip rule here if you're not familiar with that. So the FHA flip rule says that any property that was bought within the last 90 days and then sold back on the market is not eligible for an offer from an FHA buyer. This isn't saying the closing timeframe. This is from the time that the seller of the property purchased it to the time that an FHA offer is written on the property has to be at least 91 days. Doesn't matter what the value on it is. If it's that quick of a turnaround, you cannot write an offer with FHA. That being said, if the time frame is between 91 and 180 days, then FHA has another stipulation that says if the value of the property, or if the price of the property, is more than double the last sales price, then 2 appraisals will be required. So for example, if a property was purchased by the current seller for $200,000, and then 95 days later FHA buyer comes and wants to offer $405,000. Since that's more than double, you'd end up needing 2 appraisals because it's within that 90 to 180 day window. If it's after 180 days, that doesn't matter if the price is less than double. So in that scenario, seller bought it for $200,000, they're selling it now for $395,000, perfectly fine, right? Even up to $399,000 because it's less than twice the price. If you have any questions on this, happy to walk you through it. But, uh, again, want to make sure that you don't get caught surprised by that if you're listing a property that was a quick turnaround, or if you're looking at putting in an offer, especially if it looks like it was probably a flip. Good to check and see when the existing seller of that property bought it last. Next up, we have the PPI, which is the Producer Price Index wholesale inflation number that came in up 0.5% for the month, above the 0.3% that was expected. This did cause the year-over-year number to rise from 3.3% to 3.6%, while the market expected it to stay flat at 3.3%. Next, we had Fed Governor Waller spoke this week here, making a case for a Fed rate cut of a quarter percent at their next meeting in March. He abstained from the vote on the last meeting for a staying at the current level, he wanted to see a cut of rates then as well. And he pointed out that there are major revisions in 2025 of the BLS jobs report's numbers, only showing about 15,000 jobs created per month on average. He also explained that the revisions only went through March, and while the other 9 months factored in, he expects to see a net of job losses for the full year once that's done. He also doesn't believe that the strong January jobs report numbers that we got came were legitimate and expects massive revisions there as well, because they initially report the initial numbers on that showed more job gains in one month than the entire previous 9 months combined. He ends up thinking that'll get revised. Likely at this point, the BLS probably can't have any prints that don't end up getting revised pretty massively. And so far it's all been to the downside. So all the strength of the economy that several members of the Fed were talking about he's casting some significant doubt on the legitimacy of relying on those reports. Next up, Case-Shiller and FHFA appreciation came in for December showing home prices up 0.4% and 0.1% respectively. This is due in large part due to the drop in mortgage rates, increasing demand and pricing pressure in the market. So Case-Shiller is now up 1.3% year over year and FHFA is up 1.8%. We have ADP's weekly employment report for the month ending, or the 4 weeks ending February 7th, showing an average of 12,750 jobs created per week on average. And this is an increasing pace from what we've been seeing, about 51,000 pace. It's still climbing but soft compared to where we'd expect the job market to be with some of these stronger initial reads on the the list report side. And lastly here, apartment lists showed new rents up 0.2% for February. Year over year, new rents are up 1.5%, which is— or excuse me, they're down 1.5%, which is a bigger drop than the previous reading of 1.4%. The list-to-lease time is now near a record high since they started tracking these numbers in 2017, currently at 40 days from the time of listing an apartment to actually having it leased. And vacancy is at 7.4%, also a record high since 2017 when they started tracking these numbers. And renewal rents are up 3% year over year, but when blended together with new rents, they combined is up about 0.9% year over year. As always, hopefully this is helpful. Have a great weekend, finish off the month strong, and we'll see you next time. Take care.