Market Update 10/10/2023

On the job front, there's a surprise jolt. Last week's Job Openings and Labor Turnover Survey (JOLTS) data revealed that job openings jumped unexpectedly from 8.92 million to 9.6 million. With the Federal Reserve holding back on a September interest rate hike, these strong numbers could potentially influence their decisions moving forward. And speaking of influences, rapidly rising U.S. bond yields have had quite an impact on the stock market, causing some jitters. Some sectors saw a downturn, while the U.S. dollar continued its resilient ascent.

Turning our attention to the housing scene, there's an interesting trend developing. Mortgage applications have reverted to levels we last saw in 1996, primarily driven by the recent rise in mortgage interest rates. Meanwhile, while Artificial Intelligence continues its advance in many sectors, the mortgage industry still values the irreplaceable human touch. But the trend that really caught my eye? In 2022, a staggering 93% of completed multifamily units were constructed for rent, hinting at a subtle shift in homeownership sentiments. 

In regulatory news, there's a cloud of uncertainty hanging over whether the Federal Reserve will introduce more interest rate hikes. Some officials are of the opinion that the rising Treasury yields may eliminate the need for further hikes. The world of mortgages saw a slight hiccup too, with application rejections jumping to 24.7% in 2022. Amid all this, the Consumer Financial Protection Bureau (CFPB) finds itself in the spotlight, facing a Supreme Court battle over its funding mechanism – a case that could potentially redefine lending practices.

I've been getting a deluge of queries recently, and I thought I'd tackle some of the most common ones right here:

Will mortgage rates decrease soon?

The Federal Reserve's recent indication suggests that interest rates will remain elevated into next year. If you're considering a move, now might be a good time to ensure you're getting the best rate and exploring creative financing options. For the first time in my career, I saw a buyer quoted at 8.25% for a single-family home. This was not an investment property or a hard money loan. In my professional opinion, rates will rise before settling in sometime at the end of 2024 or the beginning of 2025. However, no one truly knows the future. 

Any negotiation tips for the current market?

Homes selling below asking price are still a rarity. However, there are plenty of negotiations happening elsewhere, like credits for repairs or mortgage rate buydowns. These can sometimes have a more significant impact on the buyer's bottom line than merely reducing the sale price. The key indicator that some negotiations will be successful is DAYS ON MARKET. If a property is on the market longer the seller will be more open to buyer-favorable terms. 

Should I consider assuming a seller's mortgage for a better interest rate?

While it's a niche approach, it could be beneficial under the right circumstances. Some loans, like FHA or VA loans, allow for this kind of transfer. There are hurdles, though, like a seller's willingness or the requirement for larger down payments. It's not for everyone, but there are successful cases out there, and I'm here to help you navigate them.

What if there's a government shutdown this year?

While the immediate economic impact would be mild, the housing market might see a temporary dip, especially in areas with higher government worker concentrations. However, the effects should be short-lived, not outlasting the shutdown itself. The biggest impact will be felt where flooding is prevalent and lenders require flood insurance from the National Flood Insurance Plan (NFIP). If the government shuts down so does this plan and real estate transactions that require flood insurance would be at a stand still. 

There's always something happening in the world of real estate, and I'm here to guide you through it. For deeper insights, use th elink below to tune in to the Hungry Realtor Podcast, and let's navigate these fascinating times together.