Mortgage rates have been hitting historic lows about once a week lately it seems. They have been hovering just above 3%. Join Seattle Real Estate Podcast host Sean Reynolds as he discusses why you should jump on a mortgage rate at this level and not wait for even lower rates.  

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Rookie Robinhood investors are buying bankrupt Hertz stock.  This will end in tears says billionaire Leon Cooperman for these investors.

Find out why investors are pumping millions of stock purchases into a zombie company like Hertz that is teetering on complete insolvency.  

Join Sean Reynolds, host of the Seattle Real Estate Podcast as he discusses what is behind this investor phenomenon.  

Billionaire investor Leon Cooperman has predicted a stark reckoning for amateur investors who are piling money into stocks with commission-free apps like Robinhood. 

'They are just doing stupid things, and in my opinion, this will end in tears,' Cooperman told CNBC on Monday, referring to a flood of new retail investors into online brokers, in particular the millennial-favored Robinhood. 

Since launching in 2015, Robinhood has attracted over 13 million active users, with a median age of 31. 

Traditional investors such as Cooperman sneer at the amateur traders, pointing to bizarre price movement in shares of bankrupt Hertz driven by retail investors, as small individual traders are known in the industry. 

Data from Robintrack, a site that tracks activity on the Robinhood app, showed Hertz was topping the leaderboard for highest changes in popularity among retail traders.

Hertz's shares have risen 250 percent since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680 percent last week.

Robinhood traders are betting on how high they can push the stock before it collapses. 

Record savings, stimulus checks, low interest rates and even lockdown boredom in the wake of the coronavirus outbreak have all been cited by market pundits as possible explanations for the extraordinary move.

'The gambling casinos are closed and the [Federal Reserve] is promising you free money for the next two years, so let them speculate,' Cooperman said, referring to the central bank's ballooning balance sheet.

'Let them buy and trade. From my experience, this kind of stuff will end in tears,' Cooperman said. 

Some market watchers attribute the astounding rebound of equities from March lows to the surge in cash from retail investors.

The rise of mom-and-pop traders has resulted in other puzzling moves in share prices.

Last week, an obscure Chinese online real estate company's American depositary shares jumped as much as 1,250 percent.

Market watchers attribute the surge to retail investors confused about the company's name, FANGDD Network, which is similar to the F

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Key Points:

• Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than a year ago, according to the Mortgage Bankers Association.
• That was the ninth consecutive week of gains and the highest volume in more than 11 years. 
• The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.30% from 3.38%. 

Buyers are rushing back into the housing market, enticed by record-low mortgage rates and a pandemic-induced need to nest like never before.

Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That was the ninth consecutive week of gains and the highest volume in more than 11 years. 

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said MBA economist Joel Kan.

Buyers were also fueled by a new record low mortgage rate. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.30% from 3.38%, with points decreasing to 0.29 from 0.30 (including the origination fee) for loans with a 20% down payment. 

Lower rates also fueled refinance demand. Those applications rose 10% for the week and were 106% higher than a year ago. Refinances had been slipping for weeks, but the new record low rates may have woken some homeowners up to the potential savings. 

“Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery,” Kan said.

The refinance share of mortgage activity increased to 63.2% of total applications from 61.3% the previous week. With fixed interest rates so low, the adjustable-rate mortgage share of activity decreased to just 2.8% of total applications. ARM loans carry lower rates but higher risk.

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Rising unemployment is a major threat as a second round of the coronavirus becomes a possible reality. The Reallocation Shock of workers not finding jobs in the future work-force is very real, it's threatening the US economy.  

Join Sean Reynolds as he discusses the impact of Reallocation Shock on the US economy.

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Why become a real estate agent now?? Should I start my real estate career now - considering everything that's gone on?  

What are the pros of getting going now or the negatives?  Can I get business in this market?  I think the market may get worse before it gets better, maybe now isn't the best time to get into all of this.....

Join host Sean Reynolds of the Seattle Real Estate Podcast as he discusses why now might be a great time to get into real estate sales.  He will also cover what you need to consider to get started and maybe what you can expect from your first year in the business.

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At its June meeting, the Federal Reserve said it would keep the federal funds rate at near zero, doubling down on its commitment to help aid in the coronavirus-triggered economic downturn.

In the short-term, the Fed projects a 6.5% decline in economic output in 2020, but expects to see growth again in 2021, citing the need for continued fiscal support from Congress to avoid long-lasting damage. For its part, the Fed recommitted to using its own tools to help aid in that recovery, such as increasing its purchase of Treasury securities and bonds and continuing its loan facilities.

Key Takeaways:

• Federal fund rate remains unchanged at zero.
• Fed forecasts a 6.5% decline in GDP in 2020, but expects a 5% bounceback in 2021.
• Unemployment rate will end 2020 at 9.3% and decline to 5.5% by 2022, Fed says.

What happened at the June 2020 Fed meeting
Federal funds rate remains at 0% to 0.25%
For now, anyway, we shouldn’t expect any change to the rate until the Committee is “confident that the economy has weathered recent events,” according to its post-meeting statement, and is in a better place to meet the Fed’s goals of maximum employment and price stability.

As for when that might be, the Fed still sees the ongoing public health crisis as posing “considerable risks to the economic outlook over the medium term.”

The federal funds rate isn’t expected to get a boost until after 2022. In the June Fed dot plot — which indicates each member’s future prediction of the federal funds rate’s midpoint — all Committee members said they expected the federal funds rate to stay put through 2021. Two members were more hopeful for 2022, with one dot placing its range expectation at 0.25% to 0.50% and one dot placing an expectation at 1.00% to 1.25%. Beyond 2022, Fed members plotted an expected fed funds rate between 2% and 3%.

Fed predicts a 6.5% decline in GDP in 2020
It’s been six months since the Fed made its usual quarterly economic projections (it quickly ditched its March projections in the wake of the coronavirus pandemic). So all eyes were on this month’s meeting, in which Fed members projected a 6.5% drop in the country’s GDP, inflation at 0.8% and the unemployment rate to settle around 9.3% by the year’s end.

This, of course, paints a dramatically different picture than the Fed presented at the end of last year, when it predicted 2% growth in GDP, 1.9% inflation and 3.5% unemployment.

The decline in GDP in the second quarter alone is expected to be the worst on record, according to Fed Chair Jerome Powell.

Despite the troubling numbers, the Fed’s outlook

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The United States recession has officially been called.  What does this mean for our economy?  Find out on the Seattle Real Estate Podcast.  

More than 42 million Americans have filed for unemployment benefits. Major companies including JCPenney, J.Crew, and Hertz have filed for bankruptcy. And economists are predicting GDP imploded at an annualized rate of 40% during the second quarter.

The pandemic marked an end to the mediocre but long recovery from the Great Recession. In July 2019, that expansion officially became the longest period of uninterrupted growth in US history dating back to 1854. It spanned 128 months, easily breaking the prior record of 120 months set between March 1991 and March 2001 during the dotcom boom.

US billionaires have regained $565 billion in wealth since the pit of the crisis
Normally, economists define a recession as consecutive quarters of negative growth. The United States already endured one-quarter of a shrinking economy, with GDP dropping by 5% during the first quarter.

NBER decided not to wait for a second quarter of a contracting economy, although it is widely expected to happen during the second quarter. The body also declared that while the economy peaked on a monthly basis in February, the quarterly peak happened in the fourth quarter. That disparity "reflects the unusual nature of this recession," NBER said.
"The economy contracted so sharply in March," NBER said, that by the first quarter GDP and employment was "significantly below" the levels of the fourth quarter of 2019.

Previous recessions began more subtly, causing a significant lag before NBER declared them.
For example, NBER didn't announce until December 1, 2008, that the United States had tumbled into recession the prior December. By then, Bear Stearns and Lehman Brothers had already collapsed. The stock market had imploded and Fannie Mae and Freddie Mac were taken over by the government.

Although this recession began suddenly, there is hope that it could be relatively brief. Economists are predicting GDP will turn sharply positive in the third quarter as businesses continue to reopen and Americans begin to travel again.

New infections are still the biggest risk to the economy
The economy is benefiting from unprecedented help from the federal government.
Congress and the White House passed a record-breaking stimulus package that provided direct aid to households, forgivable loans to small businesses, and bailouts to some large companies.
The Federal Reserve is taking steps that make its response to the 2008 financial crisis look tame. The Fed has slashed interest rates to zero, promised to buy an unlim

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Watch this video for the Seattle Real Estate Market Update for June 2020.  Join host Sean Reynolds of Summit Properties NW and Reynolds & Kline Appraisal as he analyzes the previous month's statistics published by the NWMLS.

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A national housing market downturn is being predicted by CoreLogic, Bank of America, and Zillow.  Will this actually happen?

Find out from real estate industry expert Sean Reynolds why these major companies are pointing to a national downturn in 2020.     
 
We will talk about buyer demand, historically low-interest rates,  historically low housing supply, and other factors that make up the national housing market.

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What is the PPP Flexibility Act of 2020?
The Paycheck Protection Program Flexibility Act of 2020, signed into law by President Trump June 5, 2020, amends the Paycheck Protection Program (PPP) to give borrowers more freedom in how and when loan funds are spent while retaining the possibility of full forgiveness.

KEY TAKEAWAYS:
- The PPP Flexibility Act amends the Paycheck Protection Program to give borrowers more time to spend loan funds and still obtain forgiveness.
- Borrowers now have 24 weeks to spend loan proceeds, up from 8 weeks.
- The Act also reduces mandatory payroll spending from 75% to 60%.
- Two new exceptions let borrowers obtain full forgiveness even without fully restoring their workforce.
- Time to pay off the loan has been extended to five years from the original two.
- The Act now lets businesses delay paying payroll taxes even if they took a PPP loan.

Understanding the PPP Flexibility Act of 2020:
Under previous PPP loan guidance, borrowers had eight weeks from the time they received the first loan installment to spend the funds. The PPP Flexibility Act of 2020 lets them extend that period to 24 weeks (but not beyond Dec. 31, 2020). They also have the option to keep the original eight-week spending period if they already had their loan before enactment of the Act. Under the new timeline, full forgiveness is still possible.1

The original PPP loan guidelines mandated that 75% of the amount forgiven had to be spent on payroll costs and up to 25% on other costs. The Flexibility Act reduces required payroll expenditures to 60% or more of the amount forgiven with up to 40% of the forgiven portion used for mortgage interest, rent, or utility payments.

For full loan forgiveness, the borrower must spend 60% or more of the entire loan amount on payroll and the balance on mortgage interest, rent, or utility payments. These changes reflect complaints from many businesses that their payroll costs went down as employees were laid off but fixed costs like rent did not.

Borrowers can now use the new 24-week covered period to restore their workforce to pre-COVID-19 levels in order to obtain full forgiveness. In no case can the covered period go beyond Dec. 31, 2020.

Two new exceptions let borrowers achieve full forgiveness even if they don't fully restore their workforce. These are in addition to previous guidance that let companies exclude workers who turned down good-faith offers of re-employment. Borrowers can now also reduce workforce requirements based on the inability to find qualified employees or if they were unable to restore operations to Feb. 15, 2020, levels due to COVID-19 restrictions.

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