A Look at the Market!

Reblogger
Real Estate Agent with eXp Realty of California, Inc. (lic. #01878277) DRE# 00949880

It is looking like a good time to be a buyer after so much time without much inventory, home buyers now have options.  The market is even more appealing as interest rates start to dip again.  Will Hamm does a great job looking into the market and pointing out the benefits for buyers to be looking for their dream homes right now.  I will point out that last year we saw a similar slowdown in the Elk Grove market about the same time.  It is hard to know what is going to happen in six to eight months, but maybe the past will repeat.

Original content by Will Hamm

A Look Into the Markets

 

This week home loan rates continued to gradually improve since the Fed hiked rates by .75% in both June and July. The elevated chance of a recession and the Fed hiking rates into the slowing economy has pushed rates to the best levels since April. Let's break down what is happening and what to look for next week.

"Won't Get Fooled Again" - The Who

Don't Be Fooled

The media will talk about the Fed hiking rates and allow viewers to believe that it includes home loan rates. The Fed can only control short-term rates with the Fed Funds Rate.

Since the Federal Reserve began raising rates in June home borrowing costs have declined. Why? Don't higher rates from the Fed equal higher borrowing costs? Not necessarily. The Fed controls short-term rates like credit cards and car loans and the like, not long-term rates such as mortgages. As we said in the past, Fed rate hikes are intended to cool inflation, slow economic growth and slow down the labor market. If inflation cools, the economy slows, and the unemployment rate ticks up...long-term rates move lower.

Long Term Rates are Talking

The 10-year note is at 2.67%...pricing in a slowing economy and less inflation. Bank of America was out last Wednesday saying they see the 10-yr yield going to 2.00% as economic conditions slow.

When we think about higher rates, the only way long term rates like the 10-year note and mortgages move higher is if the economy can absorb those rate hikes. With that said, if the economy was performing strongly and inflation was going to be a long-term problem, long-term rates would already be higher.

Energy

High energy prices have played a large role in slowing down the economy. This has consumers paying much more at the pump and for daily essentials. Oil prices have come down with a barrel at $90. Why? There are only two ways energy prices move lower. 1 - we create more supply or 2 - fears of a recession emerge. We are now staring at the latter. If energy prices break beneath $90, there is room that it will lead to further relief at the pump and less inflationary pressures which is good for long-term rates like mortgages.

Sliding Home Prices

The onset of a recession has impacted the housing market. Housing has finally seen some relief from skyrocketing home price gains in recent days as the CoreLogic Home Price Index in June saw a 18% year-over-year increase, down from the 20% plus gain seen in May. Another report showed that home prices cooled at a record pace in June. Big gains are not sustainable with historical percentage gains at 3.5% - 5%. CoreLogic is forecasting a 4.3% gain in home prices from June 2022 to June 2023. But low inventories are still plaguing the sector with the number of homes for sale on the market now 49% below levels seen in July 2019.

Volatility Remains

The next Fed meeting is in September. Up until that time, there will be several inflation readings and key economic reports for the Fed to consider. How these reports go may very well determine if and how much the Fed will hike rates. This will make the next few weeks very volatile in the bond market and interest rates. Again, if the Fed continues to hike rates into a slowing economy, it is likely we may see another downtick in home loan rates.

Labor Markets Slowing?

In the labor markets, The JOLTS report showed that there are 10.7 million jobs available across the nation, down from the recent number of 11.5 million as the job market is starting to flow. However, there are still 1.8 million open jobs per available worker with almost 6 million Americans unemployed. Outplacement firm Challenger, Gray & Christmas reported this week that job cuts in July were up 37% from July 2021.

"The job market remains tight, and large-scale layoffs have not begun. There are some indicators that hiring is slowing after months of growth, however." said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.

Bottom Line: Home loan rates have appeared to make their peak back in mid-June. With more housing inventory coming to market, now is a great time to capture the home of your dreams with prices and rates off the highest levels of late.

Looking Ahead

This week the markets will receive the inflation reading Consumer Price and Producer Price Index to measure if consumers and wholesalers have seen the worst of surging prices for goods and services; however there will be Fed speakers on tap who could disrupt the markets further.


 

 

 

Will Hamm, Hamm Homes LLC.
Aurora, Colorado
HammHomes@ymail.com

Call me at: 303-358-1147

Find me at: Facebook and HammHomes.com

Posted by

             eXp Realty of California, Inc

Raymond Henson, SRES, GRI, e-Pro

Past Client Testimonials   

3412 Babson Drive

Elk Grove, CA 95758

RayRHenson@gmail.com

916-698-8415

 

 

Comments (8)

Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.   Thanks for sharing and enjoy your weekend!

Aug 12, 2022 07:08 AM
Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

It is good to hear from you, Kristin Johnston - REALTOR® and thank you!

Aug 12, 2022 07:12 AM
Kristin Johnston - REALTOR®

you bet!

Aug 12, 2022 07:15 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Ray Henson and thank you for re blogging this blog and get the word out about it.  Make it a great day!

 

Aug 12, 2022 07:21 AM
Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

Good morning, Will Hamm, you are welcome.  Make it a great weekend!

Aug 12, 2022 07:37 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Ray,

Thank you for the re-blog of Will Hamm's post. I missed it. I'm going over to read and comment on his post.

Aug 12, 2022 08:45 AM
Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

Thank you for stopping by, Dorie Dillard Austin TX.  I hope you have a great weekend!

Aug 12, 2022 12:09 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Thank you for sharing Will Hamm’s blog post sharing his insight into the market Ray 🙂

Aug 16, 2022 12:52 PM
Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

It is good to hear from you, Paul S. Henderson, REALTOR®, CRS.  I hope you are doing well!

Aug 16, 2022 03:51 PM