Weekly Market Update 2/16/24

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. And first off, appreciate you giving me a little flexibility on the timing here this morning. We actually just changed offices, no longer in the Kaiser location. We're now at 660 Hawthorne in Salem, and so a little bit, uh, different locations. So appreciate the, again, flexibility on timing this morning as I was getting things set up. Working out of here, first day official today. And of course, background's going to look a little bit different from now on. Also now able to be hosting this on YouTube, got a recommendation from someone. So really appreciate, you know who you are, and appreciate the feedback on how we can just continually improve the value and the ease of getting this information out there. So starting off, interest rates, probably been hearing not going in our direction in the last few weeks here. Inflation data pushing that higher. So we moved from 6.97% last week to 7.14% this week for mortgage rates, according to Mortgage News Daily. This week's mortgage tip, talking about handling appraisal required repairs. So see, a lot of the times when a property is going to be listed with cash or conventional as the terms, not showing FHA, not showing VA or USDA, Oregon VA, any of those other options, And when that's happening, especially now that FHA has become such an attractive option to many clients, even with 700 credit scores, just because of the way that the rates and the payments are structured, we're seeing a lot of FHA buyers who might not have the full spectrum of options available. Well, to do something about that, one of the things I'll often recommend is to say, you know, have a conversation with the listing agent. It's surprising how many times they think that they listed it, or they don't realize it didn't show FHA or VA as terms available. But other times, figuring out what's the concern for repairs— is there a particular item? Are there certain things they're worried about? And so let's say that there's roughly $3,000 worth of potential work that would be needed if those items they're concerned about get called out. So we're $3,000 repairs away from being able to make this FHA eligible. Well, one of the things that you can do is have a conversation and say, listen, we'll write in an extra $3,000 in closing costs. And if those repairs do get called out, we will convert closing cost credit over to repairs. So that way the net is still coming out the same. But now we're moving it from seller credit to seller repairs, same amount of money at the end of the day, it takes care of the potential for if it comes up. And oftentimes I find some of those repairs they were worried about don't even end up getting called. So go the extra mile, have that conversation, talk about what happens if something gets called out, and be able to navigate around it. So you open up more opportunities for your buyers in those situations. As far as news this week, starting off with inflation reports, which are the things that really hurt us on interest rates. First one was the CPI, Consumer Price Index inflation report for January. And this came in above expectations, which really hurt rates. Specifically because the last few months we've been seeing these reports come in at or below expectations. And so especially now, that is really going to be the one that markets are looking at. So this monthly came in up 0.3% versus expectations of only 0.2%, which doesn't seem like a huge miss, but it's still showing that we're going in the wrong direction versus those expectations. And the year-over-year decreased from 3.4% to 3.1%, But again, markets were expecting it to drop to 3.0. The core rate, which strips out food and energy prices, that increased 0.4%, which was also above the 0.3 that was expected. And year over year remained at 3.9%. We got a double whammy, though, because PPI, which is the Producer Price Index, which measures wholesale inflation for January, that also came out this week and this massively beat expectations. So on the headline number, we were up 0.3% versus expectations of 0.1%. Year over year, it fell from 1% to 0.9%, but it was expected to fall to 0.6%. And the big one was the core rate. Again, stripping out food and energy prices, this rose 0.5% when estimates were of only 0.1% increase. So 0.4% different than expected, which was a really big difference there. Year over year rose from 1.8% to 2% when it was expected to decrease down to 1.6%. So PPI right on the heels of the CPI reports. That's why we got the, the increase in mortgage rates this week. And a little bit of positive news, we did see January's retail sales report come in down 0.8% when we only expected to be a 0.1% drop. So again, really big beat. Positive for the market, not quite enough to completely erase the inflation numbers though. Core retail sales were down 0.4%, which is also much lower than the gain of 0.2% that was expected. And year over year, they're up 2.5%, which is the slowest pace since 2019 when you remove for COVID. And then last couple of reports in here. So the Zillow January housing report did show 26.4% of all homes in the US sold over the asking price, with 29 days being the average time on market, showing that inventory is still very tight. You know, we did see an increase in inventory in January, but not to the levels we typically see with the seasonal buildup. And so month over month was only up about 1.5% as far as inventory goes, and we're down almost about 40% from pre-pandemic levels of inventory. And lastly here, in the initial jobless claims, we did see initial claims down 8,000 to 212,000 new filings for the week, but continuing claims is up 30,000 for the week to 1.895 million. This is the second highest reading since November of 2021. So again, market interest rates, I would say hunker down. You know, there's a lot of expectations that rates do drop this year, but we don't know when, we don't know how far, we don't know how long they're going to stay there. So in the meantime, again, just being very careful to talk with clients about knowing that maybe we can refinance, but we don't know when, and we don't know how much benefit that's going to be. So for now, you want to get in while you can. You know, if rates might go up before they go down, and especially with as strong as the market is at the moment, even with interest rates higher, imagine what would happen if interest rates drop. So find the right house, make sure you can qualify for it, make sure you can afford it, and then move on it. No reason to wait. Hopefully you have a wonderful weekend. Remember, this coming Monday as well is a holiday, so take that into account as far as closings. I'll be available if you need anything, get clients pre-approved as usual. We'll see you next week. Take care.