This week’s News Brief
This week’s Interest Rate (42nd Week)
(By Fairway Home Loan )
|30 yr fx(%)
|15 yr fx(%)
|10 yr Tr Y (%)
|A year ago
|A month ago
Prime Rate:3.0% / Ref IR: 0.00- 0.25%
- 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.
- 2022 Conventional loan limit: Conforming SFR : $625,000/ Conforming high balance: $937,500/ Confirming 2 Family: $702,000/ Conforming High Balance: $1,053,000
NJ Legal Weed Commission to Approve New Medical Pot Licenses
(Record 10/13 )
- The New Jersey Cannabis Commission(CRC) on Friday is expected to award licenses for new medical marijuana cultivation centers, as well as licenses for vertically-integrated medical marijuana operations – where the license holder grows, manufactures and sales the drug, according to the commission’s agenda for its meeting.
- North Jersey, Central Jersey, and South Jersey will be issued: Five dispensaries, two cultivation facilities, one vertically-integrated license respectively.
- The new medical marijuana licenses have been a long time coming for medical marijuana patients and advocates who say the program has been handcuffed by its popularity. Due to the supply and demand issues, some dispensaries have placed limits on popular strains that are well below what patients are legally allowed to purchase.
Next year, Still Home Price will Go Up
(Korea Times 10/9 )
- Fannie Mae forecasted that home price increase will continue till next year 2020 due to low inventory and delayed new construction because of construction material supply issue.
- The report said this year’s home sales will be up 3.3% only and many home construction projects planned to complete this year will be delayed to the next year.
- NAHB’s home index was 76 in September which is the lowest since July last year while it was 90 in November last year. According to NAHB, prices for windows, roof tiles, doors and iron beams increased 22% for last 12 months while prices increased average 1% annually before the pandemic.
- Also lack of skilled labor force is pushing labor cost which will trigger home price increase. Inflation pressure will also push home mortgage interest rates which might be an uncomfortable factor in residential market.
Low Appraisals Upend Home Sales
- An unusual high number of homes across the U.S. are being appraised below their agreed-upon sales prices, causing a number of deals to collapse. Recently buyers are frequently paying above asking price to win bidding wars, and appraisals haven’t always kept up with those rapid price increases.
- About 13% of appraisals came up below the contract price in August, according to CoreLogic. That was down from a recent high of 19.7% in May but above 7.3% in January 2020, a rate CoreLogic said is more typical for the housing market.
- Many buyers are plunking down payments of just 5% to 10% because they need extra cash available in case the house is appraised below the sales price, said Nicole Dudley, a real estate agent in Phoenix area. Lower down payments require buyers to take more debt and can make them less competitive in bidding wars.
- Earlier this year. “We weren’t having to worry about appraisals, because people were willing to waive them,” said Jennifer Wauhob, a real estate agent in Katy, Texas. “Now that they’re back on the table, we’re definitely feeling it”
Gen Are Buying Homes Jointly
(Korea Time 10/13)
- According to WSJ on 11th, M. Gen (1981 – 1996) who are buying homes jointly with friends are increased recently. Atom Data reported home buying M. Gen with different last names increased 771% between 2014 and 2021.
- Based on NAR’s report, in 2nd Qt, home buying unmarried couple increased to 11% and others, mainly room mate to 3%, which are increased by 9%, 2% respectively, compared to the last year.
- Increasing home prices and low inventory are pushing this joint purchasing of homes, but they have to plan well for one party’s moving out, common maintenance fees, and mortgage payment, etc.
Amazon Rethinks Office Return Plans, Adding Flexibility
(WSJ 10/12 )
- com Inc, expects that some corporate employees will work remotely for the foreseeable future, as the tech behemoth once again changed its return-to-office plans.
- Amazon just two months ago said it was delaying its corporate employees returning to the office until at least Jan. 3, and before had suggested that employees should try to be in the office at least three days a week. It had earlier been targeting a return in early September.
- Early this month, the accounting firm PricewaterhouseCoopers LLP said most of its U.S. employees can live anywhere in the country.
- Facebook Inc, which was among the first companies to embrace indefinite remote work for some employees, said in June that it would expand eligibility in such programs to all levels of the company.
Sharply Declining Home Sales Pose Threat to China Economy
- Home sales in China are seizing up as curbs on lending and worries about developers’ financial health deter buyers, casting a pall over an industry that is central to the Chinese economy. In recent days, numerous big developers have reported lower sales figures for September, with many declines of more than 20% or 30%.
- Real estate has played an outsize role in China’s economy recent years, compared with its importance in many other counties, and Chinese families have much of their wealth tied up in homes and in investment properties.
- Developers such as Evergrande Group are very publicly struggling to adapt to a series of changes, including rules dubbed ‘three red lines” that were introduced last year to curb the debt growth at financially weaker companies, as well as caps on banks’ property lending.
- If that continues, then the broader concern is whether some of the tightening measures come at the expense of the health of entire sector, said Mr. Wright, director of China market research at Rhodium Group. “You are going to see weaker financial conditions and weaker construction activities spilling out into the broader economy.
Oil Price Tops $80 For the First Time Since 2014
(WSJ 10/12 )
- Oil Price increase is outpacing other commodities by widest margin in more than a decade: The extended climb in oil price is leaving some other industrial commodities behind, a divergence that reflects bets that energy supply shortages will offset any slowdown in the global economy.
- S. crude rose 1.5% to $80.52 a barrel on Monday, closing above $80 for the first time since late in 2014 and bringing its climb since the end of last October to 125%.
- Further price increases could add pressure to the economy and complicate the Fed‘s plans gradually raise interest rates starting next year, analysts said. This puts Fed in an uncomfortable position.
- S. Energy Secretary Jennifer Granholm, meanwhile, said at a Financial Times conference recently that the U.S. is considering releasing oil from the Strategic Petroleum Reserve. President Biden earlier this year urged the Organization of the Petroleum Exporting Countries to increase oil production more quickly to ease any supply constraints.
Treasury Yields Top 1.6%, Highest In Months
(WSJ 10/11 )
- A wave of selling has brought U.S. Treasury yields closer to their March highs, vindicating predictions that a long summer rally would fade amid stubborn inflation and a looming turn toward tighter monetary policy.
- Yields, which rise when bond prices fall, have been on a sharp upward trajectory since the Fed’s September 21-22 policy meeting. On Friday, a disappointing September jobs report briefly stalled the climb. But the yield on the 10 year note ended the session at 1.604%, its highest close since June.
- Investors pay close attention to Treasury yields partly because they serve as a benchmark for interest rates across the economy. They are also an important economic gauge, reflecting expectations for the level of interest rates set by the Fed that are themselves dictated by growth and inflations forecasts.
- Much of buying bound to end in the fall as trading activity picked up and the Fed moved closer to the first step in tightening policy: the act of scaling back its $120 billion monthly bond buying.
- Roughly matching expectations, the Fed at its September meeting strongly signaled that it could start tapering its bond purchases as soon as November. Officials also indicated that they could raise short term interest rates above their current level near zero as soon as next year.