Weekly News (April 5, 2023)
Mortgage Interest Rates Review
(Fairway Home Loan 4/5/2023)
30 yr fx (%)
|15 yr fx (%)||FHA (%)||10 yr Tr Y (%)||5 yr Arm (%)||
7 yr Arm (%)
|A year ago||4.999||3.999||4.500||2.558|
|A month ago||6.699||5.750||6.250||3.942||6.699||6.699|
Federal Fund Rate: 4.75% -5.00% Prime Rate: 7.75%-8.00%
House price is peaked and will decline in 6 months: 지금이 고가, 집값 6개월 내 하락
(Korea Daily 4/4/23)
- Dr. Shiller said the house price is at the highest point and it is very possible to decline in 6 month.
- Home buyers are facing triple burden at the same time: 1) high price 2) high mortgage interest rates 3) low inventory.
- According to New York Federal Reserve bank survey, consumers answered the mortgage rates can be as high as 8% next year because the Fed raised the federal fund rate to 4.75-5.00% and it is anticipated to raise again in the future.
- Dr. Shiller said the Fed needs to accept the forecast that the recession will come in the future.
Warehouses Find Insulation From U.S. Banking Crises: 웨어 하우스는 미국 은행위기에도 건재
- The failures ofa few banksearlier this month set off fears that customers would pull deposits from U.S. regional banks. Many small and regional lenders are also under pressure as a record amount of commercial mortgages are set to expire this year.
- Industrial properties are largely insulated from the impact, at least for now, because warehouses aren’t facing the pressures as commercial office space, real-estate executives said.
- Companies are continuing to lease distribution centers, even though demand growth has slowed, and vacancy rates for industrial properties remain near historic lows.
High Income Earners keep renting: 고소득자들 계속해서 임대로
(Korea Times 4/4/2023)
- High income earners choose rent than own, and renters increase, i.e., high priced rental demand grow.
- Accordingly builders prefer to build rental complex rather than single home construction.
- According to Census Bureau, number of high income renters increase 3M households, or 87% during 5 years from 2016 through 2021,
Apartment-Building Sales Drop 74%, Most in 14 Years: 아파트건물 거래, 74% 감소
- Sales of rental apartment buildings are falling at the fastest rate since the subprime mortgage crisis, a sign that higher interest rates, regional banking turmoil and slowing rent growth are undercutting demand for these buildings.
- Investors purchased $14 billion of apartment buildings in the first quarter of 2023, according to CoStar Group. That represents a 74% decline in sales from the same quarter a year earlier and would be the largest annual sales decline since the first quarter of 2009.
- The cost to finance building purchases has jumped alongside the fast rise in interest rates. Rents are running flat, or are even declining in some major metro areas, after record increases.
Multifamily-Building Sales, quarterly
Rate Rises Draw Pension Funds Back to Bonds: 은퇴 연금 자금, 다시 국채로 향해
- After years of shifting money into private market investments, public pension and investment funds are taking a fresh look at publicly traded debt, thanks to the highest yields in more than a decade.
- After years of insufficiently funded benefit promises and losses in the 2000-02 dotcom bust and the 2008 financial crisis, public pension funds were banking on returns of 6% or more to cover future benefits. To meet those targets, the funds piled into private equity as well as hedge funds, infrastructure, real estate and private debt, helping fuel the growth of managers including Black-stone Inc. and Apollo Global Management Inc.
- Alternative investments rose to 34% of pension assets in 2022 from 9.2% in 2001, according to Boston College.
Consumer-price index, change from previous year
Job Openings Declined Below 10M: 고용 수요, 천만 밑으로 감소
- The number of job openings fell in February, dropping below 10 million for the first time in nearly two years in a sign that employers’ demand for workers eased amid a still strong labor market.
- There were a seasonally adjusted 9.9 million job openings in February, the Labor Department said Tuesday, down from January’s downwardly revised 10.6 million.
- The Fed Chair Jerome Powell has pointed to the imbalance between job openings and available workers as a key driver of inflation, as strong labor demand can drive up wages. But the labor-force participation rate—the share of adults who hold or are seeking jobs—has edged up in recent months, and wage growth has slowed, both signs of a looser labor market.
U.S. Labor Market
McDonald’s Starts Layoffs: 맥도날드 감원 시작
- McDonald’sCorp. temporarily closed its U.S. offices this week and has started informing corporate employees about layoffs being made by as part of a company restructuring.
- McDonald’s was laying off hundreds of corporate employees this week, according to people familiar with McDonald’s plan.
- The Chicago fast-food chain said in an internal email last week to U.S. employees and some international staff that they should work from home from Monday through Wednesday so it can deliver staffing decisions virtually.