Weekly News (May 4, 2022)

Interest Rate (18th Week)

(By Fairway Home Loan )

                       Prime Rate:3.25 – 3.50%  /  Fed Fund Rate: 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

Court ruled Leonia, NJ can’t bar cut-through traffic

(  The Records  5/4 )

• A state appellate court has ruled that the borough cannot ban non-residents from using its local streets to commute during rush hour, the latest ruling in a four-year legal battle over cut-through streets.
• Leonia drew national attention when it adopted the ordinances in early 2018 to prevent shortcuts on all or part of 40 local roads in the 1.6 square-mile municipality that were being used to avoid snarls on Route 40, 46 and 95. The ordinances restricted out-of-town drivers on 60 streets.
• It’s unclear whether Leonia may appeal the ruling. Messages left for town officials were not returned.

Use of Polybags and Styrofoam cups is prohibited in NJ from today

( Korea Times 5/4 )

• From 5/4/2022, customers have to bring their own bags or pay $1.00-$2.00 to buy recycled bag from grocery stores, pharmacies, convenience stores in New Jersey.
• Also the stores over 2500 sf are prohibited to give away paper bags.
• But polybags will be allowed for wrapping uncooked meat and fish, fruits, nuts, vegetables, and flowers.
• Restaurants cannot used Styrofoam cups and containers, utensils. Plastic straw can be used only when the customers ask.
• The charge for 1st offence will be verbal warning, 2nd offence will be up to $1000, and from 3rdoffence will be up $5000.

US Economy Shrinks 1.4%, But Spending Stays Strong

(  WSJ  4/29 )

• The U.S. economy shrank in the 1st Qt as supply disruptions weighed on output, but underlying strength in consumer and business spending suggested growth will soon resume.
• The decline in U.S. gross domestic product(GDP)at a rate of 1.4% annual rate marked a sharp reversal from a 6.9% annual growth rate in the fourth quarter, the Commerce Department said Thursday.
• The 1st Qt was the weakest since spring 2020, when the Covid-19 pandemic and related shutdowns drove the U.S. economy into a deep –albeit short – recession.
• The drop stemmed from a widening trade deficit. Imports to the U.S. surged and exports fell, dynamics reflecting pandemic-related supply chain constraints. A slower pace of inventory investment by businesses in the first quarter – compared with a rapid buildup of inventories at the end of last year – also pushed growth down.
• The GDP report is unlikely to change the Fed’s plans to raise interest rates by a half-percentage-point at a two-day meeting this week.

Home Buyers Lock in Rates, Fueling Prices

(  WSJ  5/4  )

• Home prices continued to surge in virtually every corner of the U.S. during the 1st Qt as mortgage rates rose rapidly, according to a Tuesday report from NAR.
• Many buyers rushed to lock in purchases in the 1st Qt before the rates climbed even higher, according to real-estate agents.
• The median prices for single-family existing homes were higher in the 1st Qt compared with a year ago in 181 of 185 metro areas tracked by NAR.
• Demand continues to outpace supply, and a persistent shortage of homes for sale is still prompting bidding wars among buyers and pushing process higher.
• Economists expect rising mortgage rates to lead to slower home-price growth by the end of the year.
• The ability for some households to work remotely continues to spur home-buying demand. Millions of millennials are also aging into their prime home-buying years.

Adjustable Mortgage Rates program sharply increased

(  Korea Daily 4/29 )

• MBA has reported that new mortgage applications reduced 8.3% from the last week and it is about a half compared to a year ago.
• But the applications for variable interest rates program increased.

The application for 5-year ARM increased 9% from the last week. It is double from 3 month ago.

• Typically, if the difference between 30-year fixed rate and ARM is bigger than 1%, ARM program applications increase. As the Fed increase federal fund rate in May and continues quantitative squeezing policy, the difference between two programs become wider.  

YIMBY movement spread as home prices soar

(  Korea Daily 4/22  )

• YIMBY(Yes In My Back Yard) as is opposite to NIMBY(Not In My Back Yard) movement is spread in the Bay Area in San Francisco, Calf.
• The movement leaders claim that more new construction, either luxury apartment complex or government-assisted rental apartment, should be built in order to resolve the issues of home prices soaring and homeless people increasing.
• Also they claim that keeping the current situation without increasing home supply will victimize people for affordable housing and residential renters.
• The opponent of YIMBY claims that too much housing supply will create heavy traffic and gentrification that existing middle class people will be pushed away from the area. And so, the local government should focus on affordable new construction.

Fed Officials Adopt A Gentle Approach to Taming Inflation

(  NYT  5/4 )

• The Fed is poised to set out a path to rapidly withdraw support from the economy as its meeting on Wed. – and while it hopes it can contain inflation without causing a recession, that is far from guaranteed.
• The Fed chair Jerome H Powell and his colleagues are expected to raise interest rates half a percentage point on Wed, which would be the largest increase since 2000. Officials have also signaled that they will release a plan for shrinking their $9T balance sheet starting in June, a policy move that will further push up borrowing cost.
• The Fed’s response to hot inflation is already having visible effects: Climbing mortgage rates seem to be cooling some booming housing markets, and stock prices are wobbling. The months ahead could be volatile for both markets and economy as the nation sees whether the Fed can slow rapid wage growth and price inflation without constraining them so much that unemployment jumps sharply and growth contracts.

• Many economists do expect inflation to peak in the months ahead, though it is unclear how long it will take for it to come back down from March’s 6.6% reading to something more in line with the 2% annual rate the Fed targets on average over time – or whether job market pain and a recession.

Amazon Has First Quarterly Loss in 7 years

(  WSJ  5/4  )

• com posted its first quarterly loss in seven years, a result that reflected broad economic trends related to a slump in online shopping, higher costs from inflation and supply-chain woes, as well as market jitters over electric-vehicle startups.
• Revenues for the technology company rose 7% in the January-to-March period, the slowest growth pace in about two decades as consumers returned to prepandemic habits and spent more money in person at stores. The company lost $3.8B in the quarter, compared with a profit of $8.1B a year ago, when a surge in online orders due to the pandemic lifted the company’s prospects.
• Amazon might see additional cost pressures as it navigates continued attempts by warehouse employees to unionize.

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