Real Estate News: Real Estate Investing Podcast

The Real Estate News Brief: Surprise Inflation Report, Mortgage Rate Prediction, Housing Crisis Solution

08.18.2022 - By Kathy Fettke / RealWealthPlay

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In this Real Estate News Brief for the week ending August 13, 2022… a surprise inflation report, how that might impact mortgage rates, and a solution for the housing crisis involving women and immigrants. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic News We begin with economic news from this past week. The report on the Consumer Price Index, or CPI, shows a bigger-than-expected decline in July. According to the Labor Department, the annual rate of inflation dropped from 9.1% to 8.5%. Economists surveyed by Dow Jones had expected a reading of 8.7%. The decrease was mostly due to a big drop in gas prices. The core rate, which omits prices for fuel and food, was also better than expected at 5.9%. (1) Producer prices also put on the brakes in July. That index was down .5% after a 1% jump in June. As reported by Market Watch, it’s the first drop in producer prices since April of 2020. (2) Jobless claims were up by about 14,000 to a total of 262,000 new claims for the week. There’s been a slow increase in applications as the Fed tightens its monetary policy and companies tighten their belts, slightly. Stuart Hoffman at PNC Financial told CNBC: “The rise in initial claims since early April is a cool breeze blowing over a hot labor market.” Continuing claims also rose to a total of about 1.43 million. (3) Consumers are feeling a little better about the economy because of falling gas prices. The University of Michigan’s Consumer Sentiment Index was up four points to 55.1 in August. MarketWatch reports that lower gas prices have put consumers in a better mood but they are still concerned about the cost of things like food and rent. (4) Mortgage Rates Mortgage rates also jumped back over 5% last week. Freddie Mac says the average 30-year fixed-rate mortgage rose 21 basis points to 5.22%. The 15-year was 4.59%. Freddie says: “Although rates continue to fluctuate, recent data suggests that the housing market is stabilizing as it transitions from a surge of activity during the pandemic to a more balanced market.” (5) In other news making headlines… NAR: Mortgage Rates May Have Topped Out The latest inflation reports have led some economists to believe that we won’t see mortgages go much higher than they are now. The Chief Economist for the National Association of Realtors, Lawrence Yun, believes that the worst of the situation is now behind us. (6) He said in a realtor.com blog: “If there is a sustained decline in gasoline prices and more production of apartments and single-family homes, consumer prices will pull back, encouraging the Federal Reserve policy to be less aggressive.” And that: “Mortgage rates will fall.” Auction.com: Foreclosure Spike Expected Foreclosure activity is expected to increase over the next 12 months, as pandemic-related protections expire for seriously delinquent homeowners. The information comes from a survey by Auction.com with dozens of clients. (7) The survey shows that nine in 10 mortgage servicers are expecting more foreclosures. 74% expect a “slight increase” while 15% expect a “substantial increase.” The expected foreclosure rate is below historical averages nationwide but some clients expect 30% or more of their delinquent inventory to end up in foreclosure. The survey shows that the loans most likely to foreclose are government-insured loans and properties in the Midwest. Women & Immigrants to the Rescue! Getting more women and immigrants interested in the construction industry could help solve the housing crisis. Home builders have been dealing with a severe labor shortage, and a Harvard researcher told members of Congress recently, that the industry could expand its workforce by promoting the industry to women and immigrants. (8) Harvard’s Christopher Herbert says the industry is “overwhelmingly male” and needs more women on the job. He also pointed out that 20 years ago “we built two million homes a year… and a lot of that was through immigration.” Currently, about 25% of workers are immigrants although some states, like California and Texas, have a much higher percentage. About 11% of construction workers are women. That’s it for today. If you’d like to read more about any of these topics, check the show notes (below) for links at newsforinvestors.com. And please remember to hit the subscribe button, and leave a review! If you haven’t yet joined RealWealth, please sign up. It’s free and will give you access to our members-only Investor Portal where you’ll find data on specific markets, the property teams that we work with, and other resources. Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.marketwatch.com/story/coming-up-u-s-july-cpi-data-due-at-8-30-am-eastern-11660132986?mod=mw_latestnews 2 -https://www.marketwatch.com/story/u-s-producer-prices-moderate-in-july-11660221842?mod=bnbh_mwarticle 3 -https://www.marketwatch.com/story/u-s-jobless-claims-move-higher-in-latest-week-continuing-recent-trend-11660222483?mod=economic-report 4 -https://www.marketwatch.com/story/falling-gas-prices-buoy-consumer-sentiment-temper-inflation-expectations-11660313127?mod=newsviewer_click 5 -https://www.freddiemac.com/pmms 6 -https://magazine.realtor/daily-news/2022/08/11/yun-slowing-inflation-suggests-mortgage-rates-have-topped-out 7 -https://www.housingwire.com/articles/expect-a-foreclosure-spike-in-the-coming-months/ 8 -https://www.marketwatch.com/story/the-solution-to-the-labor-shortage-in-construction-more-women-and-immigrants-says-harvard-researcher-11657823746?mod=real-estate-construction

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