Prices rise, but homes still affordable by Ron Schulz

For the week of March 12, 2018 — Vol. 16, Issue 11

>> Market Update

QUOTATION OF THE WEEK…“I’ve got to keep breathing. It’ll be my worst business mistake if I don’t.” –Steve Martin, American actor, comedian, writer, producer and musician

INFO THAT HITS US WHERE WE LIVE… CoreLogic reports January home prices gained 6.6% annually, noting: “Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes.”

Yet Trulia says affordability has grown. They found that today, the median household can afford a home that’s 1.5 times more expensive than the median home price, while in 1980, that household could only afford a home that was about 75% of the median price.

The difference lies with today’s historically low mortgage rates. Trulia reports that at today’s income levels, mortgage rates would have to reach 9.4% before the median home price became unaffordable nationally.

BUSINESS TIP OF THE WEEK… Trust your gut. Your instincts usually let you know when something is a good, or a bad, idea. To access your instincts, simply sit quietly and listen to yourself.

>> Review of Last Week

TARIFFS, SCHMARIFFS… Tariff and trade war worries evaporated after investors were blind-sided by a blockbuster February jobs number–313,000 new Nonfarm Payrolls. The blue-chip Dow shot back up over 25,000 and the tech-y Nasdaq catapulted to a new record high.

That unexpectedly large jobs total was reported as “a reflection of the strongest labor market in two decades.” Party poopers pooh-poohed the 0.1% gain in hourly wages, but those are still up 2.6% for the year, and that’s not counting bonus and commission income.

Thursday, the President signed a proclamation for tariffs on steel and aluminum. But he exempted Canada and Mexico and left open possible exemptions for other countries willing to renegotiate current deals. Investors liked that, though not as much as Friday’s jobs report.

The week ended with the Dow UP 3.3%, to 25336; the S&P 500 UP 3.5%, to 2787; and the Nasdaq UP 4.2%, to 7561.

In the bond market, Treasuries finished modestly lower, but the 30YR FNMA 4.0%, bond we watch ended the week unchanged, at $102.38. In Freddie Mac’s latest Primary Mortgage Market Survey, national average 30-year fixed mortgage rates edged up for the ninth week in a row. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… The New York Fed reports mortgage debt increased by $139 billion the last quarter, but still remains 4.4% below its peak level. So, more recovery to come.  

>> This Week’s Forecast

HOME BUILDING, INFLATION SLOW, RETAIL SALES, MANUFACTURING GROW February Housing Starts are forecast off a tad, just under the 1.3 million mark. Analysts predict inflation has slowed, gauged by the February Consumer Price Index (CPI). But Retail Sales are expected to show growth, along with manufacturing, according to the Philadelphia Fed Index and other key factory measures.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Mar 12 – Mar 16

M
Mar 12
14:00 Treasury Budget Feb -$216.0B -$192.0B Moderate
Tu
Mar 13
08:30 Consumer Price Index (CPI) Feb 0.2% 0.5% HIGH
Tu
Mar 13
08:30 Core CPI Feb 0.2% 0.3% HIGH
W
Mar 14
08:30 Retail Sales Feb 0.3% -0.3% HIGH
W
Mar 14
08:30 Retail Sales ex-auto Feb 0.4% 0.0% HIGH
W
Mar 14
08:30 Producer Price Index (PPI) Feb 0.1% 0.4% Moderate
W
Mar 14
08:30 Core PPI Feb 0.2% 0.4% Moderate
W
Mar 14
10:00 Business Inventories Jan 0.6% 0.4% Moderate
W
Mar 14
10:30 Crude Inventories 03/10 NA +2.4M Moderate
Th
Mar 15
08:30 Initial Unemployment Claims 03/10 226K 231K Moderate
Th
Mar 15
08:30 Continuing Unemployment Claims 03/03 NA 1.870M Moderate
Th
Mar 15
08:30 Empire Manufacturing Index Mar 15.0 13.1 Moderate
Th
Mar 15
08:30 Philadelphia Federal Index Mar 23.7 25.8 HIGH
F
Mar 16
08:30 Housing Starts Feb 1.283M 1.326M Moderate
F
Mar 16
08:30 Building Permits Feb 1.330M 1.396M Moderate
F
Mar 16
09:15 Industrial Production Feb 0.3% -0.1% Moderate
F
Mar 16
09:15 Capacity Utilization Feb 77.7% 77.5% Moderate
F
Mar 16
10:00 U. of Michigan Consumer Sentiment Index – Prelim. Mar 99.5 99.7 Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… A week from this Wednesday, the Fed futures market expects the first rate hike of the year. But a second one isn’t seen until June. Note: In the lower chart, an 89% probability of change is an 89% certainty the rate will move higher.

Current Fed Funds Rate: 1.25%-1.50%

After FOMC meeting on: Consensus
Mar 21 1.50%-1.75%
May 2 1.50%-1.75%
Jun 13 1.75%-2.00%

 

Probability of change from current policy:

After FOMC meeting on: Consensus
Mar 21        89%
May 2        16%
Jun 13        77%

 

This post is an advertisement for Ron Schulz. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Supreme Lending and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Supreme Lending. EVERETT FINANCIAL, INC. D/B/A SUPREME LENDING NMLS ID #2129 (www.nmlsconsumeraccess.org) 14801 Quorum Dr., #300, Dallas, TX 75254. 877-350-5225. Copyright © 2018. Not an offer or agreement. Information, rates, & programs are subject to change without prior notice. Not available in all states. Subject to credit & property approval. Not affiliated with any government agency. AZ Mortgage Banker License 0925918, AZ Principal Office: 25030 S 190th Street, Queen Creek, AZ 85142. Licensed by the Department of Business Oversight under the CA Residential Mortgage Lending Act License 4130655. CO Mortgage Company – Regulated by the Division of Real Estate. Delaware Lender License 10885. GA Mortgage Lender License 22114– Georgia Residential Mortgage Licensee. IL Residential Mortgage License MB.6760323-DBA1– Illinois Residential Mortgage Licensee. MA Mortgage Broker License MC2129. MA Mortgage Lender License MC2129. Licensed by the N.J. Department of Banking and Insurance – New Jersey Residential Mortgage Lender License. Licensed Mortgage Banker-NYS Department of Financial Service. NY Mortgage Banker License B501049. Ohio Mortgage Broker Act Certificate of Registration MB.804158.000. Ohio Mortgage Loan Act Certificate of Registration SM.501888.000. OR Mortgage Lending License ML-4265. Licensed Mortgage Banker by the PA Department of Banking – Pennsylvania Mortgage Lender License 45048. Rhode Island Licensed Lender 20142998LL.

Leave a Reply