Weekly News (April 13, 2022)
Interest Rate (14th Week)
(By Fairway Home Loan )
|30 yr fx(%)||15 yr fx(%)||FHA(%)||10 yr Tr Y (%)|
|A year ago||2.875||2.375||2.500||1359|
|A month ago||3.999||3.150||3.875||1.941|
Prime Rate:3.25% / Ref IR: 0.25- 0.50% .
- 3% Down payment for 1st home buyer is available.
- 5% Down payment 2-4 units FHA program available
- 15% Down payment 2 families -conventional program available.
- Potential home buyer — Have a pre-approval first before the shop. Now we have 48hour underwriting turn-around times for regular loans.
- Self employed borrower – Need to prepare 3 month business bank statements and the YTD Profit and Loss Statement. YTD income can’t decline more than 30% compared to last year.
- 2022 Conventional loan limit:
Conforming SFR : $647,200.00/ Conforming high balance: $970,800.00
Conforming 2 Family: $828,700/ Conforming High Balance: $1,243,050
Recreation Marijuana start selling this month in New Jersey
( The Record/Korea Times 4/12 )
- New Jersey Cannabis Regulatory Commission has approved 7 companies for selling recreational Marijuana on 11th.
- These companies have 18 dispensaries in the state, but only 13 stores got approved from the local municipalities.
- These stores include Fort Lee which is operated by Ascend, Lodi, which is operated by Terrascend, Paramus and Paterson which are operated by GTI.
- NJ Cannabis Regulatory Commission specifies an adult over 21 can purchase 1 Oz per person and anyone can possess 6 Oz per person.
- Price of marijuana is $10 ~ $20 per a gram which means $320 ~ $480 per an Oz (28 grams).
Mortgage rates become game changer in the residential market – More listings?
( Korea Times 4/12 )
- According to Realtor.com, new home listing increased 8% on 4/3, compared to a year ago, which was 1st increase after continuous 4 week decline.
- Nationwide home inventory is still 13% low, compared to a year ago.
- If new listings increase with this pace till May, total inventory might be more than last year level.
- Redfin has reported that listing prices dropped 12% till 4/3 during the last 4 weeks. Also the report says the price drop is apparent for the houses under $1M price.
- Mortgage rates increase over 5% which is the first time for 11 years since 2011.
Office-Lease Expirations Pose Risk to Landlords
( WSJ 4/13 )
- A record amount of U.S. office space is hitting the market this year due to a jump in lease expirations, putting property owners in a bind and threatening to leave banks and other lenders stuck with more troubled loans.
- So far, most landlord continued to paying rents even when their employees stayed home through the pandemic. Now as more leases expire, more tenants are shrinking their offices because they need less space under hybrid strategies that blend office with remote work, broker say. Leases for 243M sf of U.S. office space are set to expire in 2022, the most office space to hit the market in a single year since real-estate service firm JLL began tracking this data in 2015.
- The looming lease expirations represent a 40% increase since 2018 and pose a new threat for office landlords already frustrated by stubbornly slow return-to-office rates and a national vacancy level of 12.2%. That rate is a high for pandemic period and up from 9.6% at the end of 2019, according to Costar Group.
- Even though Blackstone said the building posed a unique set of challenges that are not representative of our portfolio, the company is expected to hand back to creditors a troubled Midtown Manhattan office building with $308M debt load. The building’s loan was turned over to a special servicer after its main tenant, L Brands decided not to new its lease when it expired last month.
Home Builder Find Refuge in Investors
( WSJ 4/13 )
- Investors who buy and then rent new homes are rapidly becoming a favorite customer of the home builder industry.
- The majority of the hundreds of thousands of new homes built last year were sold to individuals and families to live in. But rising mortgage rates are making those purchases much more expensive and could lead to pullback in demand by those traditional buyers.
- However, investors holding billions of dollars are eager to buy these homes in bulk, a boon to new home builders who have increased construction in recent month.
- Large investors have amassed some $89B in capital to spend on building or buying new rental homes and deployed only about one-quarter of it, according to real estate research and advisory firm Zelman & Associates.
- Rental builders can often pay more for land because they are backed by larger capital sources, build denser communities with more units and come in with plans to raise rents every year, said Rick Palacios, an analyst at the Burns firm. “It’s not a shocker,” he said. “In the Southwest, rents are going up double digits, and they’ve been going up double digits for a while now.”
Risk of Recession Appears to Grow
( WSJ 4/11 )
- Economists surveyed by WSJ this month on average put the probability of the economy being in recession sometime in the next 12 months at 28%, up from 18% in January and just 13% a year ago.
- They slashed their forecast for growth this year. On average they see inflation-adjusted gross domestic product rising 2.6% in the fourth Qt of 2022 from a year earlier, down a full percentage point from the average forecast six months ago, though still higher than the 2.2% average annual growth rate in the decade before the pandemic.
- The median economist in the survey projected that the Fed will take the federal fund rate’s midpoint range to 2.125% by the end of 2022, and then to 2.875% by December 2023 – close to the Fed’s own projections.
- While recognizing the rising risk of a downturn, a majority of economists — 63% — still think the Fed will be able to rein in inflation without triggering a recession – what economists call a “soft landing”
Consumer prices in US Up 8.5% over past year
( The Record / WSJ 4/13 )
- Inflation soared over the past year at its fastest pace in more than 40 years, with costs for food, gasoline, housing and other necessities squeezing American consumers and wiping out the pay raises that many people have received.
- The Labor Department said Tuesday that its consumer price index jumped 8.5% in March from 12 months earlier, the sharpest year-over-year increase since December 1981. From February to March, inflation rose 1.2%, the biggest month-to-month jump since 2005.
- Gasoline prices have rocketed 48% in the past 12 months. Used car prices have soared 35.3%, though they actually fell in February and March. Bedroom furniture is up 14.7%, men’s jackets suits and coats 14.5%. Grocery process have jumped 10%, including 18% increases for both bacon and oranges.
- “The Fed will be pressing firmly on the break pedal – not just pumping the brakes – in an effort to slow demand and bring the inflation rate break down,” said Greg McBribe, chief financial analyst at Bankrate.
The Gap between Short-term and long-term U.S. bond yields are close to Zero – Sing of recession?
( Business Week of 4/4 )
- In normal times the yield curve runs uphill; that is, Treasuries with longer maturities offer higher yields than shorter-dated ones to compensate investors for the risk of tying up their money for longer periods. When longer-term yields sink close to or below shorter ones, it is a sign that investors are pessimistic about economic growth prospects — and often portends a recession.
- The 10- and 2- year spread inverted preceding each of the last eight recessions.
- But Bloomberg’s Business Week reported that this time it is not a sign of a recession and the yield curve may invert not in response to economic conditions but as a reflection of Fed policy
- Meantime, S. 10-year bond yield (2.7798%) went over China 10-year bond yield(2.7675%), which they are reversed in 12 years.
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