All Encompassing Mortgage and Real Estate Thread

[UTPhil2006 3,807]

18 minutes ago, Trey3216 said:

ISM Manufacturing PMI just came in 1.1 lower than expected as well...

Yet here we are up .02 on the day as of now

[CBT 1,282]

How common is this Transaction Fee that Coldwell Banker keeps charging me? Is that the norm for all brokerage houses now? 6% plus $150?

[UTPhil2006 3,807]

13 minutes ago, CBT said:

How common is this Transaction Fee that Coldwell Banker keeps charging me? Is that the norm for all brokerage houses now? 6% plus $150?

On the RE side?  Maybe bc its Coldwell Banker but you'd think larger corps would be less likely to charge a nonsense fee.

[Wulaw Horn 19,070]

42 minutes ago, UTPhil2006 said:

Yet here we are up .02 on the day as of now

at 8:00 am when habib texted me the MBS market we were up 31.  Looked at Jobs report.  Happy days are here again.

Fucked around, got ready, ate breakfast, commuted to work, logged into my computer and we are down 9 in the MBS market.  ON a day with 10k jobs for the month and 113k in revisions downward. And bad manufacturing.  

Make it make sense Phil, make it make sense. 

[UTPhil2006 3,807]

12 minutes ago, Wulaw Horn said:

at 8:00 am when habib texted me the MBS market we were up 31.  Looked at Jobs report.  Happy days are here again.

Fucked around, got ready, ate breakfast, commuted to work, logged into my computer and we are down 9 in the MBS market.  ON a day with 10k jobs for the month and 113k in revisions downward. And bad manufacturing.  

Make it make sense Phil, make it make sense. 

[CBT 1,282]

17 minutes ago, UTPhil2006 said:

On the RE side?  Maybe bc its Coldwell Banker but you'd think larger corps would be less likely to charge a nonsense fee.

Correct.  

[Trey3216 15,346]

Almost nothing stopping us from seeing the 52wk high yield in the next few days.   Good Lord 

[UTPhil2006 3,807]

33 minutes ago, Trey3216 said:

Almost nothing stopping us from seeing the 52wk high yield in the next few days.   Good Lord 

I show 4.99 as the 52W. But we're basically at 4 month highs with the .08 up today. 

[Captainant 27,668]

https://www.cnbc.com/2024/11/04/homebuyer-average-age-rises-to-56-amid-rising-homeownership-costs.html

Quote

 

The average age of homebuyers is now 56, up from 49 in 2023, according to the National Association of Realtors' annual state-of-the-market report released Monday. That's a historic high, up from an average age in the low-to-mid 40s in the early 2010s.

The median age of first-time buyers also rose from 35 to 38, while the share of first-timers dropped from 32% to 24% of all buyers for the year ending July 2024. That marks the lowest percentage since NAR started tracking the metric in 1981.

"In my two decades in the mortgage business, I've never seen a more difficult time for millennials to purchase a home," says Bob Driscoll, senior vice president and director of residential lending at Massachusetts-based bank Rockland Trust.

That's largely due to rising homeownership costs, he says. The median U.S. home price is now $435,000, per NAR — up 39% since 2020 — while the average 30-year fixed mortgage rate has more than doubled to over 6% in that time.

High homeownership costs are especially challenging for younger buyers, as many struggle to save for a down payment while juggling student loan debt, high rent prices and lower wages early in their careers. The biggest obstacle to homeownership for younger buyers is saving for a down payment, says Driscoll.

An 18% down payment — the median percentage buyers put down, according to NAR — on a $435,000 home comes to $78,300. That's a significant expense, nearly matching the annual U.S. median household income of $80,610, per U.S. Census Bureau data.

Younger buyers who can afford down payments are still often outbid by older, wealthier buyers using equity from homes they already own. Without this advantage, younger buyers must "absorb the additional cost out of pocket," says Driscoll.

 

Yikes, that's alot of people getting priced out

[UTPhil2006 3,807]

5 minutes ago, Captainant said:

https://www.cnbc.com/2024/11/04/homebuyer-average-age-rises-to-56-amid-rising-homeownership-costs.html

Yikes, that's alot of people getting priced out

Yep the value increase the first part of this decade followed by the massive interest rate jump then coupled with the lack of substantial savings makes that number make sense. The buyers we have that are below 30 are doing FHA minimal down payment, down payment gifts from family, or DPA programs. Rarely do you see the well qualified 20% down buyer at the younger ages 

[horn4life 3,760]

I can't decide how the Bond market is going to react to the election.  My gut is that rates (have not acted as usually expected) are still high because of Trumps' viability and the economic impact of his traditional levels of spending combined, with a propensity for inflationary tariffs.  Or do they think that either candidate is going to simply spend so massively that is does not matter?  My gut is the former.  IF so is a Harris wins does that makes the bond bet less attractive with a continuation of "status quo" economic policies?  Or is it the latter?   Instability in the middle east is also a big factor, but I just don't see Iran risking a big attack due to the potential response. With I also think is part of the interest rate stew.  

I guess we will know in a week or so.  It will be interesting to see the Bond markets reaction in the coming days.  If things unfold as I think they will, I think that the bond market will give you guys the drops you are begging for.  If not... I am gonna need a cash buyer on my Dad's remodeled Lake House.

 

 

[ChickenSandwich 9,836]

3 hours ago, Captainant said:

https://www.cnbc.com/2024/11/04/homebuyer-average-age-rises

3 hours ago, Captainant said:

https://www.cnbc.com/2024/11/04/homebuyer-average-age-rises-to-56-amid-rising-homeownership-costs.html

Yikes, that's alot of people getting priced out

-to-56-amid-rising-homeownership-costs.html

Yikes, that's alot of people getting priced out

I’d argue interest rates and home insurance premiums (+property taxes in some states) are as big of hindrance, if not a bigger hindrance than a downpayment. You have options for a one time downpayment. Not much you can do about the other two. 

[UTPhil2006 3,807]

1 minute ago, ChickenSandwich said:

I’d argue interest rates and home insurance premiums (+property taxes in some states) are as big of hindrance, if not a bigger hindrance than a downpayment. You have options for a one time downpayment. Not much you can do about the other two. 

Insurance is definitely pushing those on the DTI fringe over. Definitely have told a couple (or 10) they have to come down about 50k+ on their purchase price budget 

[horn4life 3,760]

3 hours ago, UTPhil2006 said:

Insurance is definitely pushing those on the DTI fringe over. Definitely have told a couple (or 10) they have to come down about 50k+ on their purchase price budget 

Insurance in Florida is about to become one of the key price point pressures.  Perhaps Florida will become an adequately funded insurer of last resort, writing policies.  But more often than not these things are underfunded.  I wanted to check my memory and this was what popped up.https://www.cnn.com/2024/10/11/business/citizens-insurance-hurricane-milton/index.html#:~:text=The state-backed nonprofit home,largest provider in the state.

Highlight was they have 1.3 million policy holders and $15 billion, back on October 11th.  Not sure what your replenishment rate is, but avg Fla house is $400K, that's $520 billion in insured property, with 1.3 million policy holders.  If you can't get insurance, who is gonna lend you money on an uninsurable home? At any rate.

One a completelu different subject- what do you guys think about loans of longer duration than 30 years? I can see the fact that most folks don't stay even 10 years in a house, google says 8 years on average.  But I can see arguments to the contrary.  Just wondering if you all had any thoughts?  

[Slacks 6,821]

2 minutes ago, horn4life said:

One a completelu different subject- what do you guys think about loans of longer duration than 30 years? I can see the fact that most folks don't stay even 10 years in a house, google says 8 years on average.  But I can see arguments to the contrary.  Just wondering if you all had any thoughts?  

30 / 60 / 90... the number is arbitrary, really. buyers don't set rates and terms, they select rates and terms.

give me 99 years at 1% and I'm buying everything.

give me 9 years at 19% and I'll sit where i am.

i've been in my house 15 years... paid off, then cashed out at a lovely 3.x%. house pays me 7% and is worth 2x what I refi'd. I don't even know what to do next.

 

(I know what Phil wants me to do next.)

[UTPhil2006 3,807]

10 hours ago, horn4life said:

Insurance in Florida is about to become one of the key price point pressures.  Perhaps Florida will become an adequately funded insurer of last resort, writing policies.  But more often than not these things are underfunded.  I wanted to check my memory and this was what popped up.https://www.cnn.com/2024/10/11/business/citizens-insurance-hurricane-milton/index.html#:~:text=The state-backed nonprofit home,largest provider in the state.

Highlight was they have 1.3 million policy holders and $15 billion, back on October 11th.  Not sure what your replenishment rate is, but avg Fla house is $400K, that's $520 billion in insured property, with 1.3 million policy holders.  If you can't get insurance, who is gonna lend you money on an uninsurable home? At any rate.

One a completelu different subject- what do you guys think about loans of longer duration than 30 years? I can see the fact that most folks don't stay even 10 years in a house, google says 8 years on average.  But I can see arguments to the contrary.  Just wondering if you all had any thoughts?  

They have 40 year loans now but they aren't commonplace and they are non QM and not attractive rates. But they're out there 

[Trey3216 15,346]

Good Lord.  30yr is up 15bps in AH right now

[Wulaw Horn 19,070]

4 hours ago, Trey3216 said:

Good Lord.  30yr is up 15bps in AH right now

Wowzers. 

[Wulaw Horn 19,070]

On 10/22/2024 at 10:54 AM, LCHorn said:

That’s one reading of it.  I think there’s more chaos in the markets at present than one explanation can account for, i.e., there’s little consensus about what comes next.  
 

The immediate, post 9/18 deterioration in bond pricing wasn’t due to inflation concerns, it was reassurance the the Fed would be more accommodative and that the  risk/reward balance favored equities (which depressed bond demand).  War in the Middle East, oil price shock risk, the election, inflation coming down globally, seasonal adjustments are all in the strew pot, I just don’t know how you tease one out from another.  
 

My old boss wrote a blog post a couple of days ago and he thinks the rates will fall after the election*, but it might be later in Q1 before we get back to where we were 9/12-9/17.  
 

*he actually didn’t write this part, but I bet he’s counting on the Dems losing the Senate, House and President both go Dem, and a divided Congress reassures markets that fiscal policy will be restrained.  

 

On 10/22/2024 at 11:32 AM, Wulaw Horn said:

Your boss is exceedingly bad at handicapping (in my opinion) and I will line up as much as he wants to put money on the other side of what he thinks is going to happen on the election. That being said- I think that sort of points toward the point you are making about how little consensus there is on what comes next.  We will see in 2 weeks the start of a consensus building one way or another I'm sure as to what's next.  

 

On 10/22/2024 at 12:43 PM, Wulaw Horn said:

Trump 312 or so to 226- 53 GOP Senate- who the fuck knows in the house. That's my prognostication.  Go look at my Georgia prediction for that game to see how well I can see the future

  

Went ahead and nailed that except a little light (probably) on Senate. 
10 year up 15 in after hours trading. Not sure that makes sense on a rocket ship to the moon with cute coming and weak jobs report and inflation coming back down, but we will see how it shakes out. 
sort of nuts to me right now. 

[LCHorn 2,620]

And down 70-good morning America.

[Wulaw Horn 19,070]

Down 33 on MBS now. Sort of a shrug?  We move more for a bad inflation number. 

[UTPhil2006 3,807]

2 minutes ago, Wulaw Horn said:

Down 33 on MBS now. Sort of a shrug?  We move more for a bad inflation number. 

Gotta love the UWM rates are improving email. Oh from 0.18 up to 0.16? 😂

[UTPhil2006 3,807]

No real surprise but Fed officially announces .25 rate cut 

[LebongJames 1,811]

Let’s see shit drop.

[UTPhil2006 3,807]

11 hours ago, LebongJames said:

Let’s see shit drop.

From your lips to gods ears. 

[UTPhil2006 3,807]

14 hours ago, LebongJames said:

Let’s see shit drop.

Slow but steady. Down another .05 today so far 

[jdhorn92 1,549]

22 hours ago, LebongJames said:

Let’s see shit drop.

Keep in mind this is the Real Estate thread and the Fed dropping quarter point, while good overall for many things, is not going to be a barometer of up Mortgage rates moving down.  The 10year is more closely tied to Mortgage Rates and up until a day or so ago, its been going up for 2 weeks and taking 30 fixed with it.

[LebongJames 1,811]

26 minutes ago, jdhorn92 said:

Keep in mind this is the Real Estate thread and the Fed dropping quarter point, while good overall for many things, is not going to be a barometer of up Mortgage rates moving down.  The 10year is more closely tied to Mortgage Rates and up until a day or so ago, its been going up for 2 weeks and taking 30 fixed with it.

I’m well aware and have been in RNC for 15 years so interest rates are very important to my business. 

[KYHorn 17,058]

Probably a major contributor to the persistently high rates that's often not discussed: as part of its quantitative tightening, the Fed has been dumping mortgage backed securities.

 

Edited November 10 by KYHorn

[Orale 1,087]

https://www.nytimes.com/2024/11/11/business/economy/mortgage-rates-trump-inflation.html?unlocked_article_code=1.ZE4.axMD.loU-L0lvF-Jc&smid=url-share

Quote

Rafael Corrales, a real estate agent in Miami, recently showed houses to a young couple hoping to move from a rental into a home. They had been lured to the market after hearing that mortgage rates had come down.

But when the couple went to get approved for a home loan, they found that the borrowing costs had ticked up once again.

“They were very confused,” said Mr. Corrales, 49, an agent for Redfin. It pushed them back onto the sidelines of the housing market, and they’re now staying put in the hope that rates will fall again.

Mortgage rates fell steadily from this spring through September, as economic data slowed and as investors began to expect a steady string of interest rate cuts from the Federal Reserve. But the rate on a 30-year mortgage has reversed course and climbed sharply over the past month to 6.79 percent nationally, from about 6.1 percent at the start of October.

The move has come as a shock to some home buyers, who had waited many months for Fed officials to begin lowering borrowing costs, hoping that they would bring relief to the mortgage market.

The logic was fairly simple. When the Fed lowers its benchmark interest rates, the downward shifts tend to trickle through financial markets to lower other interest rates. While the biggest impact is on short-term rates, the effect can extend to 10-year Treasury notes, which mortgages closely track. And the Fed is, in fact, adjusting policy. Officials cut interest rates for the first time in four years in September, and they followed with a quarter-point rate cut on Thursday.

But other recent developments have helped to counteract the rate cuts.

For one thing, market-based rates like mortgages tend to move in anticipation of future Fed policy — not the policy at the moment when the cuts happen. And just how much the central bank will manage to lower rates next year is increasingly in doubt. The economy has been stronger than expected, which could argue for less aggressive Fed reductions. Donald J. Trump’s election as president only further fuels uncertainty.

Mr. Trump has proposed a cocktail of tariff increases and tax cuts that could stoke inflation, economists and investors think. As a result, White House policy could prevent Fed officials from lowering borrowing costs by as much as they otherwise might. In fact, Wall Street investors began to bet on higher inflation and fewer rate cuts as Mr. Trump’s victory came into sight. And mortgage costs also move for reasons other than the Fed outlook: Expectations for higher deficits could also help to push them up, for instance.

The upshot for home buyers is an unsatisfying one. Many economists do expect mortgage rates to fall again in the months to come, but exactly how far is murky.

Greg McBride, chief financial analyst at Bankrate, said he was expecting that “the new normal over the next couple years will be mortgage rates in the 5s and 6s.” Daryl Fairweather, chief economist at Redfin, said she thinks that rates will drop to around 6 percent over the next 12 months.

Either would be far above the sub-3 percent rates of 2021 — or even the 3 to 4 percent rates that were common in the 2010s — and higher than what some economists were projecting just a few months ago.

“I do think that with time rates will fall,” said Igor Popov, chief economist at Apartment List. “But I don’t think we’re looking at a near-term future that’s going to take us back to 3 percent mortgage rates.”

Mr. Trump promised to sharply lower interest rates — including mortgage rates — from the campaign trail. But the president has no direct control over Fed policy.

And analysts across Wall Street projected that Mr. Trump’s campaign promises would risk keeping interest rates at least slightly higher than they otherwise would be. In fact, the yield on 10-year Treasury bonds jumped 0.2 percentage points on Wednesday, the biggest move in more than two years.

Some economists think that with the election now over and at least that source of uncertainty fading, rates will slowly come down next year.

“Rates have gone up in the past two weeks, but I think it’s mostly because of volatility leading up to the election,” Ms. Fairweather said.

But with mortgage rates poised to stay much higher than they were as recently as 2021, the housing market may remain stuck.

Many owners who locked in super-low mortgage rates at the height of the pandemic are unwilling to sell and walk away from their comparatively lower monthly payments. That, in turn, limits how many starter homes are for sale — which means that even with weaker demand from buyers, prices have continued to rise.

The lock-in effect “restricts mobility, results in people not living in homes they would prefer, inflates prices and exacerbates economic inequality,” researchers at the Federal Housing Finance Agency wrote in a recent paper. They estimated that more than 1.7 million home sales had been forgone over the past two years.

Michael Kosch, who lives in Grosse Pointe Shores, Mich., a suburb of Detroit, has a mortgage rate of about 1.9 percent, locked in during the depths of the pandemic. The house he and his wife bought in 2020 does not meet all of their needs: The couple and their young daughter could use an extra bedroom, a bigger garage and an upstairs laundry. But when they started scoping out nearby homes this summer, they flinched at the rates.

“Even if mortgage rates come down into the 5 percent range, you just can’t give it up,” Mr. Kosch said, referring to his pandemic-era deal. They opted to fix up their home instead.

And if the combination of hefty prices and high borrowing costs persists, it is likely to keep affordability historically poor.

It is not clear that White House policy will do much help in the years to come. Mr. Trump has suggested slashing regulations, which housing economists have said could help somewhat.

But he has also blamed immigrants for pushing up housing costs, even though economists point out that their impact is probably limited, and that they also help to expand the housing supply as a central part of the construction work force.

And while Mr. Trump at one point promised that he would bring mortgage rates “back down to, we think, 3 percent, maybe even lower than that,” he cannot force the independent Fed to lower rates or buy bonds to make that happen.

High rates and high prices are posing a problem for people like Scott Grillo, a renter in Rochester, N.Y., who has been looking to buy his first home but who has been held back by costs. He has been waiting for the 30-year mortgage rate to dip below 5 percent before making the leap.

“I’m looking for the perfect moment, which doesn’t always happen, but I’m crossing my fingers,” Mr. Grillo said.

Mr. Corrales, the Redfin agent in Miami, is also watching, as many prospective buyers make similar choices. He said some had been waiting for the election, eager to see what might come next.

“Both sides of the table are waiting for rates to be sub-6,” Mr. Corrales said.

But rates now seem unlikely to decline to the levels that Mr. Grillo and Mr. Corrales are looking for quickly — if at all.

“The housing market distortions that we’ve seen are maybe becoming even more entrenched, or at least persisting longer than people had initially thought,” said Lu Liu, an assistant professor of finance at the Wharton School at the University of Pennsylvania. “That’s certainly something that the new administration will have to deal with.”

 

[UTPhil2006 3,807]

Gonna be a minute before we get into the 4's. 5's should be attainable. And I would think at some point people are going to want to start accessing their equity in the home with either a HELOC or cash out. 
 

That being said I'm guessing in Miami on the example of the couple they used, Home price and insurance didn't help the situation either for DTI purposes 

[horn4life 3,760]

My appraiser buddy did a presentation on interest rates to a mortgage broker last year.  It sort of pissed them off.  His assertion was that a 30 year rate of 6% was what was necessary traditionally to sustain the industry.  Reading back a few pages, I realized why all the brokers were pissed. It's difficult for so many now to remember when a 7% interest rate was "OK."

I think that rates are gonna fall maybe .75 at the very, very most this Spring.  In fact honestly that may be generous, as after the December cut (I anticipate) the Fed is going to be very hard pressed to continue cutting.  As I think it will start to become apparent that 2% goal of the fed will begin moving in the opposite direction.  Hope to fucking hell, I am completely wrong.  But a year from now, sadly, I think today's rates may look a lot more reasonable than they do currently.   I do not think the 30 year will come close to sniffing 4% this year.  I am hoping like hell for 6%, this Spring, but my guess is a 6.2% bottom. 

Again hope I'm wrong...  

 

[UTPhil2006 3,807]

6 hours ago, horn4life said:

My appraiser buddy did a presentation on interest rates to a mortgage broker last year.  It sort of pissed them off.  His assertion was that a 30 year rate of 6% was what was necessary traditionally to sustain the industry.  Reading back a few pages, I realized why all the brokers were pissed. It's difficult for so many now to remember when a 7% interest rate was "OK."

I think that rates are gonna fall maybe .75 at the very, very most this Spring.  In fact honestly that may be generous, as after the December cut (I anticipate) the Fed is going to be very hard pressed to continue cutting.  As I think it will start to become apparent that 2% goal of the fed will begin moving in the opposite direction.  Hope to fucking hell, I am completely wrong.  But a year from now, sadly, I think today's rates may look a lot more reasonable than they do currently.   I do not think the 30 year will come close to sniffing 4% this year.  I am hoping like hell for 6%, this Spring, but my guess is a 6.2% bottom. 

Again hope I'm wrong...  

 

Well seeking as we haven't been able to to discuss appraisals for several years, and his commentary seem shortsighted, would you allow him to follow up on here 

[horn4life 3,760]

5 hours ago, UTPhil2006 said:

Well seeking as we haven't been able to to discuss appraisals for several years, and his commentary seem shortsighted, would you allow him to follow up on here 

His was more of a "get used" to higher rates and adapt.  That we have had an extended period of very low interest rates that have now become "the norm" of expectations.  His basic premise was that the low rates were not and never were "the norm."  But a period of sustained aberration, that incorrectly was now viewed as a "new norm."

I need to grab a drink with him and make sure I am not misconstruing his presentation.  My recollection was that he was regurgitating some of the same mortgage rate thinking, after the market meltdown in the early 80's, and at that point rates were significantly higher than they are today.  Then as now, that 6% rate is where the RE industry can be healthy and sustaining.  Above that... not so much.  Which I think most everyone here is in agreement?

"Norms" are all about expectations.  And right now higher interest rates are viewed as outside of "the norm" so buyers are waiting for a return to that expected norm.  Only after the expected norm is not reached in the time frame expected do expectations change.

A good example is, how many people thought that prices would return to the highs we saw here in Austin.  They refused to drop their price, as "the norm" was so much higher just a few short months before.  There we lots of listings that I views as "not real listings" as they were only listed to see if an extraordinary price could be obtained.  They were not really looking or needing to sell,  just willing to list to see if that could get that super high price.  I viewed these listing as not real, in that they had a price stipulation in the minds of the owners that was not obtainable.  Eventually owners who actually needed to sell or move have only one choice, capitulate on price.  This will be the same come to Jesus reckoning, on interest rates.  But the expectation is still that very low sub 5% rates were "the norm." 

Gradually the expectation of that norm rate is going to change.  Hell, my Dad bought a condo with I think a variable interest rate of like 12%, in the very early 1980's.  Covid forced the Fed to push rates down to try and keep the economy moving.  I simply do not see what is going to keep pressure on downward rates?  Fed is going to cut once more this year, then the government spending picture is going to start coming into focus, with crunchable data the Fed will have concerns about.  And the last time Trump was in office the deficit rose to twice twice the annual rate of any prior administration.  Deficits put upwards pressure on interest rates.  Deficit spending and inflationary tariffs I am afraid are going to short circuit any chance for that 5% you guys in the business are hoping for.  As I think the double whammy of increased deficit spending and higher costs due to tariffs will conspire to keep rates higher for longer. I hope desperately that I am wrong, but I think a year from now, today's rates will not seem as out of whack. As time will have changed "the norm" of expectations.

If we can just get to 6% then the RE market can at least get it's feet underneath it.

Edited November 12 by horn4life

[UTPhil2006 3,807]

25 minutes ago, horn4life said:

His was more of a "get used" to higher rates and adapt.  That we have had an extended period of very low interest rates that have now become "the norm" of expectations.  His basic premise was that the low rates were not and never were "the norm."  But a period of sustained aberration, that incorrectly was now viewed as a "new norm."

I need to grab a drink with him and make sure I am not misconstruing his presentation.  My recollection was that he was regurgitating some of the same mortgage rate thinking, after the market meltdown in the early 80's, and at that point rates were significantly higher than they are today.  Then as now, that 6% rate is where the RE industry can be healthy and sustaining.  Above that... not so much.  Which I think most everyone here is in agreement?

"Norms" are all about expectations.  And right now higher interest rates are viewed as outside of "the norm" so buyers are waiting for a return to that expected norm.  Only after the expected norm is not reached in the time frame expected do expectations change.

A good example is, how many people thought that prices would return to the highs we saw here in Austin.  They refused to drop their price, as "the norm" was so much higher just a few short months before.  There we lots of listings that I views as "not real listings" as they were only listed to see if an extraordinary price could be obtained.  They were not really looking or needing to sell,  just willing to list to see if that could get that super high price.  I viewed these listing as not real, in that they had a price stipulation in the minds of the owners that was not obtainable.  Eventually owners who actually needed to sell or move have only one choice, capitulate on price.  This will be the same come to Jesus reckoning, on interest rates.  But the expectation is still that very low sub 5% rates were "the norm." 

Gradually the expectation of that norm rate is going to change.  Hell, my Dad bought a condo with I think a variable interest rate of like 12%, in the very early 1980's.  Covid forced the Fed to push rates down to try and keep the economy moving.  I simply do not see what is going to keep pressure on downward rates?  Fed is going to cut once more this year, then the government spending picture is going to start coming into focus, with crunchable data the Fed will have concerns about.  And the last time Trump was in office the deficit rose to twice twice the annual rate of any prior administration.  Deficits put upwards pressure on interest rates.  Deficit spending and inflationary tariffs I am afraid are going to short circuit any chance for that 5% you guys in the business are hoping for.  As I think the double whammy of increased deficit spending and higher costs due to tariffs will conspire to keep rates higher for longer. I hope desperately that I am wrong, but I think a year from now, today's rates will not seem as out of whack. As time will have changed "the norm" of expectations.

If we can just get to 6% then the RE market can at least get it's feet underneath it.

All very well articulated and I apologize if it came off brash. I don't think anyone truly does know what coming, Habib included. I'd just like to pick his brain. 

[Dbeasy 15,051]

1 minute ago, UTPhil2006 said:

All very well articulated and I apologize if it came off brash. I don't think anyone truly does know what coming, Habib included. I'd just like to pick his brain. 

Agree. No one knows where the rates are headed. You have pressure upward with exorbitant government deficit spending offset by a potential recession. 

What makes it impossible to predict is the election of Trump. One one hand, a full Republican Congress and presidency would normally be very good for long term interest rates as they narrow deficit spending. Unfortunately, the current iteration of the Republican party is more about just tax cuts and inflationary Trump ideas, than normal Republican local policy.

We will need to see the next six months shake out before understanding the ultimate direction of interest rates, unless a recession hits in 1Q. 

[horn4life 3,760]

1 hour ago, Dbeasy said:

Agree. No one knows where the rates are headed. You have pressure upward with exorbitant government deficit spending offset by a potential recession. 

What makes it impossible to predict is the election of Trump. One one hand, a full Republican Congress and presidency would normally be very good for long term interest rates as they narrow deficit spending. Unfortunately, the current iteration of the Republican party is more about just tax cuts and inflationary Trump ideas, than normal Republican local policy.

We will need to see the next six months shake out before understanding the ultimate direction of interest rates, unless a recession hits in 1Q. 

I don't see a recession coming in the 1st quarter.  With the amount of sideline money coming into the stock market after pulling out prior to the election, a 1st quarter recession would only happen if business investment collapses.  Which I don't think is a possibility until Q2.  Now I am talking the general economy.  RE is basically in a recession already.  But RE does not define the entire economy.  Now Q2?  there will be a lot more clarity in the levels of spending and direction of the new administration in Q2.  OR employment is a LOT more in the shittier than I think it is, or has been reported.

RE is one of those industries, like Oil and Gas that is cyclical.  But a period of more than a decade of falling interest rates has made RE nearly non-cyclical, in that the big negative swings that are a normal part of cyclical business cycles has not dipped too far to the negative side.  The last year has been about the worst, and you have not see tons of realtors, mortgage brokers, and appraisers shutting their doors.

From my perspective I simply see very little that is going to cause rates to recede.  Rates should have pulled back with the 1/2 and 1/4 point cuts, but what did we see?  So I guess what I am saying is that you guys in the business need to prepare yourselves for a bumpy fucking ride.  What I would be trying to do if I was in your shoes is to try and tell the tale (whether you believe it or not) that these rates may come down some, but if your buyers are waiting for 5%. It's a pipe dream.  Only when "the norm" is that today's rates are not oppressive, will movement again start in earnest.  It's all about the perception and expectation.

The sooner folks in the mortgage industry capitulate and can convince buyers that lower rates are not on the horizon, then buyers will not delay, delay, delay, hoping for that house they loved at 4.5% a few years ago. And that will only take place when the majority of folks in the industry think that rates are about as good as they are going to get.  As I said before I think we might see 6.25% in the spring.  But I would be shocked to see 5%.    From a 10,000 foot perspective the industries I see hurt worst from a mass exodus of cheap workers via deportation, are agricultural, restaurants, and construction.  Which should naturally increase costs in all three industries. Anyhow sorry to be a Debbie Downer.  But the folks that are gonna make money in mortgage lending the next couple quarters are going to be the brokers that can convince their clients that these rates are the "new norm."  And that you might be looking at 11% in two years. Simply as FOMO is a great sales tool.  The RE market right now is a dream for an interest rate FOMO, that I sadly think is not going to occur. So those that can sell these rates will survive.  Those that are waiting alongside their clients for a couple percent drop? Maybe...

I would already be in austerity mode reducing my spending as much as I could, if I were in RE.  There is a reason you need to save a lot of money in cyclical businesses.  Unfortunately this lesson is one largely forgotten in the RE industry, because we have had a very, very long period of low rates keeping things flowing.  AGAIN, hope like fuck I am wrong.  But I would be trying to prepare myself for a sustained period of reduced income.  

 

[UTPhil2006 3,807]

Marry the home, date the rate. If only i could convince buyers that. 

[Wulaw Horn 19,070]

17 hours ago, horn4life said:

My appraiser buddy did a presentation on interest rates to a mortgage broker last year.  It sort of pissed them off.  His assertion was that a 30 year rate of 6% was what was necessary traditionally to sustain the industry.  Reading back a few pages, I realized why all the brokers were pissed. It's difficult for so many now to remember when a 7% interest rate was "OK."

I think that rates are gonna fall maybe .75 at the very, very most this Spring.  In fact honestly that may be generous, as after the December cut (I anticipate) the Fed is going to be very hard pressed to continue cutting.  As I think it will start to become apparent that 2% goal of the fed will begin moving in the opposite direction.  Hope to fucking hell, I am completely wrong.  But a year from now, sadly, I think today's rates may look a lot more reasonable than they do currently.   I do not think the 30 year will come close to sniffing 4% this year.  I am hoping like hell for 6%, this Spring, but my guess is a 6.2% bottom. 

Again hope I'm wrong...  

 

I will absolutely take the opposite side of this bet. We were refinancing people into the mid 5’s 60 days ago.  
the only thing causing inflation right now to be beyond the 2% mark is shelter costs and that’s a fucked yo calculation that has nothing to do with real world events (look up how owners equivalent rent is calculated, realize that’s like 35% of the component and then have utter and complete contempt for government numbers). 
we’ve had 20 years of data saying 4.5 is more or less the median rate- it’s not resetting to 7 being considered a good rate. 

[Wulaw Horn 19,070]

4 hours ago, Dbeasy said:

Agree. No one knows where the rates are headed. You have pressure upward with exorbitant government deficit spending offset by a potential recession. 

What makes it impossible to predict is the election of Trump. One one hand, a full Republican Congress and presidency would normally be very good for long term interest rates as they narrow deficit spending. Unfortunately, the current iteration of the Republican party is more about just tax cuts and inflationary Trump ideas, than normal Republican local policy.

We will need to see the next six months shake out before understanding the ultimate direction of interest rates, unless a recession hits in 1Q. 

We are inflationary for debt because almost the entirety of GDP growth has been on the back of government sector (and adjacent government sector of health care). 
we get back to an economy that actually sees private sector growth and it won’t be inflationary. We saw this in the first Trump Presidency. 

[swraith 346]

Home prices only beginning to feel the bite of climate change, J.P. Morgan analysts warn | Morningstar

‘There is now a clear negative relationship between climate risk and house-price appreciation,’ analysts say

But climate risk is finally beginning to be reflected in home-price growth. Rising home-insurance costs, for example, have been pushing property values down. "It has been recently documented that property-insurance expenditures have risen sharply in riskier areas since 2020," the analysts said, "even after adjusting for inflation."

[Captainant 27,668]

6 minutes ago, swraith said:

But climate risk is finally beginning to be reflected in home-price growth. Rising home-insurance costs, for example, have been pushing property values down. "It has been recently documented that property-insurance expenditures have risen sharply in riskier areas since 2020," the analysts said, "even after adjusting for inflation."

Insurance rates got double whammied by increasingly frequent and severe storms, especially in coastal areas - PLUS - the absurd explosion in home prices from 2019-2023. There's a load of homes in my area that have doubled in price since 2020, and for the last couple decades had only had small incremental price growth

[UTPhil2006 3,807]

6 minutes ago, Captainant said:

Insurance rates got double whammied by increasingly frequent and severe storms, especially in coastal areas - PLUS - the absurd explosion in home prices from 2019-2023. There's a load of homes in my area that have doubled in price since 2020, and for the last couple decades had only had small incremental price growth

But on the whole your neighborhood has been a solid sustainable growth. I would wager to say you were happy with your decision and following refinance. 
 

But yeah c-man (not literally) is killing us with insurance rates currently 

[LCHorn 2,620]

3 hours ago, horn4life said:

The last year has been about the worst, and you have not see tons of realtors, mortgage brokers, and appraisers shutting their doors.

I’m not sure in what industry that gives you so much presumed visibility into ours, but licensed LO’s are 60% of what they were in 2022 and I bet that number declines further after the 2024 renewal period concludes at the end of the year.

No idea on realtors and title co folks, but the former has a lot of people doing it as a side gig and I know the latter has been hammered.  

Sorry to pick on you but an appraiser presenting to mortgage folks on interest rates is a bit pedantic, as well.  

3 hours ago, horn4life said:

The sooner folks in the mortgage industry capitulate and can convince buyers that lower rates are not on the horizon, then buyers will not delay, delay, delay, hoping for that house they loved at 4.5% a few years ago

Sorry, why would that be our responsibility?  Most buyers aren’t stupid, they can do the math themselves and if they bought before 2022 most of them couldn’t buy the SAME house today without paying hundreds, and sometimes thousands, more a month.  

[UTPhil2006 3,807]

3 hours ago, UTPhil2006 said:

Marry the home, date the rate. If only i could convince buyers that. 

QFT 

[Bateshorn 9,927]

1 hour ago, Wulaw Horn said:

We are inflationary for debt because almost the entirety of GDP growth has been on the back of government sector (and adjacent government sector of health care). 
we get back to an economy that actually sees private sector growth and it won’t be inflationary. We saw this in the first Trump Presidency. 

Without being CR: never smoke your supply, to use a metaphor. 

There are a couple of different ways the election can shake out: one is the one you laid out.  Tax cuts get rewritten by a GOP majority, with little to no Dem input, that stimulates more business spending, while deep budget cuts reduce government stimulus, balancing things out. Deficits either grow slowly and modestly, or maybe even come down a bit. Powell is able to continue to reduce interest rates.  Bond markets, and related mortgages, approve, and rates start to fall fairly smoothly. You guys get new cars and pools, world is good. 

The alternative is the GOP goes insane, cuts taxes to the bone, and spending doesn't really come down either. Trump fires Powell after he holds rates steady when inflation refires, and the Supreme Court doesn't stop him, and whoever replaces him pulls an Arthur Burns, slashes rates to make Trump happy.  The Bond market loses it's shit, mortgage rates go through the roof, and you guys are on the canned bean diet for the forseeable future. 

I guess it could be somewhere in the middle as well, but discounting the story the bond market is telling is a dangerous game. 

[UTPhil2006 3,807]

2 minutes ago, Bateshorn said:

Without being CR: never smoke your supply, to use a metaphor. 

There are a couple of different ways the election can shake out: one is the one you laid out.  Tax cuts get rewritten by a GOP majority, with little to no Dem input, that stimulates more business spending, while deep budget cuts reduce government stimulus, balancing things out. Deficits either grow slowly and modestly, or maybe even come down a bit. Powell is able to continue to reduce interest rates.  Bond markets, and related mortgages, approve, and rates start to fall fairly smoothly. You guys get new cars and pools, world is good. 

The alternative is the GOP goes insane, cuts taxes to the bone, and spending doesn't really come down either. Trump fires Powell after he holds rates steady when inflation refires, and the Supreme Court doesn't stop him, and whoever replaces him pulls an Arthur Burns, slashes rates to make Trump happy.  The Bond market loses it's shit, mortgage rates go through the roof, and you guys are on the canned bean diet for the forseeable future. 

I guess it could be somewhere in the middle as well, but discounting the story the bond market is telling is a dangerous game. 

Didn't Trump appoint Powell?

[Bateshorn 9,927]

Just now, UTPhil2006 said:

Didn't Trump appoint Powell?

That doesn't mean alot with Trump. Powell is a very traditional Fed guy.  Takes his mantle to fight inflation and unemployment very seriously.  Trump mostly cares about how the stock market it doing. The bond market is not as important to him. That doesn't mean he can't be reasoned with by some Wall Street type like John Paulson, but his go to mode is "stonks go up"  

[horn4life 3,760]

2 hours ago, Wulaw Horn said:

I will absolutely take the opposite side of this bet. We were refinancing people into the mid 5’s 60 days ago.  
the only thing causing inflation right now to be beyond the 2% mark is shelter costs and that’s a fucked yo calculation that has nothing to do with real world events (look up how owners equivalent rent is calculated, realize that’s like 35% of the component and then have utter and complete contempt for government numbers). 
we’ve had 20 years of data saying 4.5 is more or less the median rate- it’s not resetting to 7 being considered a good rate. 

I am referring to the 30 year mortgage rate,  last week the 30 year sat at 6.81%.  My assertions are based on that rate.  I expect that 6.81 to what?  Barely budge at all with a 1/4 point Fed move? And then budge in the wrong direction? 

I hope like fuck I am wrong and I am seeing 4.5 rates out the wazoo in the Spring.  But right now I am looking at how to keep my stock market gains moving forward in a market that I think is going to be very challenged from an inflation and instability perspective.  So 10 years treasury futures, are one of the investments I am looking at, if things go as I expect.  I am data mining contrary opinions. 

We have also in that same 20 year period of low rates had low inflation.  My assertion is that inflation fears are going to probably be backed up by inflation reality.  I am trying to figure out the best ways to profit if the assertion is correct.  My suggesting austerity, and precaution are simply cautionary.  Better to prepare for worst case scenario, and be gleeful in a best case scenario.

1 hour ago, LCHorn said:

I’m not sure in what industry that gives you so much presumed visibility into ours, but licensed LO’s are 60% of what they were in 2022 and I bet that number declines further after the 2024 renewal period concludes at the end of the year.

No idea on realtors and title co folks, but the former has a lot of people doing it as a side gig and I know the latter has been hammered.  

Sorry to pick on you but an appraiser presenting to mortgage folks on interest rates is a bit pedantic, as well.  

-------------------------------------

Sorry, why would that be our responsibility?  Most buyers aren’t stupid, they can do the math themselves and if they bought before 2022 most of them couldn’t buy the SAME house today without paying hundreds, and sometimes thousands, more a month.  

No worries, I take no offense.  I am talking broad markets and economics.  Not the nuts and bolts specifics of day to day mortgage lending.  My appraiser buddy was giving a historical perspective. And nobody in the audience agreed last January that rates were not going to be back in the 5-6 range by last Summer... 

As far as "your responsibility" it's not.  But when you are trying to help out any potential client, you are ultimately trying to close a deal.  If you can convince more folks that the number right in front of them (I said capitulation) might be as good an interest rate as they are going to see?  Does that get a deal closed? Or just piss them off, because they don't like that assertion?   Eventually the market dictates, normality in interest rates.  But getting people to sign on the dotted line for the biggest purchase of their lives is an emotional close.  At least IMHO.

16 minutes ago, UTPhil2006 said:

Didn't Trump appoint Powell?

Yep- he replaced Yellen.

 

20 minutes ago, Bateshorn said:

Without being CR: never smoke your supply, to use a metaphor. 

I guess it could be somewhere in the middle as well, but discounting the story the bond market is telling is a dangerous game. 

This is what I am saying.  I fail to see where the downward pressure is going to come from.  With the exception of a really shitty economy.  Which I know none of us want.  My perspective is NOT from the mortgage industry. But I come here to get a feel for what folks who work in the industry are thinking now.  I used to come for more general questions.  Since I have a background in economics I simply see a lot more danger than safety in rates if you are hoping for a large decline. 

I am also a worst case scenario guy (I have a suture kit in my tackle box).  As I try specifically to find any potential negative.  If you search hard for the negatives and can't find them, then you just might have a good idea or plan.  I am just seeing a lot more external factors making me lean toward rates increasing rather than decreasing.

[horn4life 3,760]

Hey what do you guys int he industry predict the 30 year and Mortgage Market Index to come in at tomorrow?

Edited November 12 by horn4life