Ethen Sanchez - Mortgage Broker

02/02/2023

ADP released their employment report, showing that there were only 106,000 job creations in the month of January, which was much weaker than the 175,000 expected. Looking at the sectors, Leisure and Hospitality led the gains once again. Construction and manufacturing accounted for 47,000 job losses. ADP also reported that annual pay for job stayers increased 7.3% year over year, unchanged from the previous report. Job changers saw an average increase of 15.4%, up from 15.2%. ADP said, “In January, we saw the impact of weather-related disruptions on employment during our reference week.” While ADP is blaming the number on poor weather in some parts of the country during the week of the 12th, when they collect data, we are reading this as a weak figure. It is winter, and there are supposed to be seasonal adjustments for this type of thing. Additionally, it’s been very mild in most of the country.

02/01/2023

The FHFA (Federal Housing Finance Agency) released its House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Different than Case Shiller, it does not include cash buyers or jumbo loans. The FHFA reported that prices were down 0.1% in November and are up 8.2% year over year. Home prices, according to FHFA, are only down 1.2% from their peak. Based on this, you can interpolate that the decline in Case Shiller is coming from higher-priced homes where there is less demand. Additionally, there are likely cash discounts being offered, where buyers paying in cash are able to command a lower price, which is why Case Shiller is also lower. Here is a quote from the FHFA, which sounds similar to what we have been saying: “U.S. house prices were largely unchanged in the last four months and remained near the peak levels reached over the summer of 2022, While higher mortgage rates have suppressed demand, low inventories of homes for sale have helped maintain relatively flat house prices.”

01/31/2023

The National Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices fell 0.6% in November. This is always a weak time of the year for housing, and after seasonal adjustments, home prices were only down 0.3%. While home prices have been softening a bit, they are still up 7.7% on a year-over-year basis. The pace of appreciation decelerated from 9.7% in the previous report and 20.8% at the peak in March. This does not mean that home prices are down 13.1% from their peak…it means that home price gains have slowed to only a 7.7% annually. Home prices have only declined 3.6% nationwide from their peak, and while this is certainly a softening, it’s a far cry from a crash of 20-30% declines. The 10 and 20-city indexes are down 5% from their peak, showing that the major cities are declining a bit more than the overall nation. Some of these cities were somewhat overheated and are now giving back a little more. When removing those cities, the rest of the nation is more flat from the peak, as evidenced by FHFA.

01/31/2023

Pending Home Sales, which measures signed contracts on existing homes, rose 2.5% in December. Additionally, November was revised higher from -4% to -2.6%. Looking at the originally reported number from last month, sales are up 4%. We are starting to see housing sales figures rebound in New Home Sales, Pending Home Sales, and mortgage applications. It’s likely the bottom is in for these reports, and as rates continue to move lower, activity will continue to increase. Sales are now down 33% from last year, which is an improvement from down 38% in the previous report, but still well below last year’s levels. The NAR said, “This recent low point in home sales activity is likely over. Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

01/27/2023

Homebuyers can lower monthly payments and closing costs! Implement this strategy in a market full of price reductions.

Check out this Seller Buydown Homebuying Strategy: https://youtu.be/xNtr9pPT25Q

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Homebuyers can lower monthly payments and closing costs! Implement this strategy in a market full of price reductions.Connect with me for a free scenario ana...

01/26/2023

New Home Sales, which measures signed contracts on new homes, rose 2.3% in December to a 616-unit annualized pace, which was in line with estimates. Last month’s figure was revised lower, which made the gain today appear bigger…but we did see a slight uptick in activity from November. This is in line with what we are seeing with traffic reported from builders in NAHB, as well as the increase in mortgage applications, as rates have moved lower. New Home Sales are, however, down 27% from last year. There were 461,000 new homes for sale at the end of December. At the current pace of sales, there is a 9 months’ supply. However, only 71,000, or 15% are completed. When looking at the pace of sales vs homes that are completed, there is only a 1.4 months’ supply. The median home price fell 6% last month to $442,100, but this can be skewed due to the mix of sales. Year over year, the median home price is up almost 8%.

01/24/2023

Existing Home Sales, which measures closings on existing homes, showed that sales were down 1.5%% in December at a 4.02M annualized pace, which was better than expectations looking for a 3.4% decline. On a year-over-year basis, sales are down 34%. Inventory continues to move lower after peaking at 1.3M in August, as it does every time this year after the normal seasonal build, and declined for the fifth straight month to 970k. This is a decline of 13.4% from the previous report. This will continue to limit the downside in home prices and sets up for a reacceleration in appreciation once hibernating buyers come back next year when rates fall further. There is a 2.9 months’ supply of homes, which is tight, because 4.6 months is considered normal. But if you look at active listings, there are only 690,000, which means that 29% of the “inventory” in the Existing Home Sales report is under contract and not truly available. This speaks to demand, as a normal market has 25% of inventory under contract. When looking at the month’s supply of available homes for sale, it’s really 2 months. The median sales price of $366,900 is down 1% on the month but up 2.3% year over year. Homes remained on the market on average for 26 days, up from 24 days, but they are still moving fast. 57% of homes were on the market for less than 30 days. First Time Home Buyers have accounted for 31% of sales, which was up from the previous report of 28%. Cash buyers accounted for 28% of sales, which was up from 26%.

01/23/2023

Housing Starts in December were down 1.4% to a 1.38M unit annualized pace. Starts are down 22% year over year. Single-family starts, which are most important, were up 11.3% last month at a 909k unit pace. They are still down 25% year over year. Housing Permits, which is the future supply, were down 1.6% last month at a 1.3M unit pace and are down 30% year over year. Single family were down 6.5% last month to 730k units and down 35% year over year.

01/20/2023

The NAHB home builder survey for January increased by 4 points from 31 to 35. Both present conditions and future expectations were higher. Traffic increased by 3 but are still at a very low level of 23. “It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” said Jerry Konter, NAHB chairman and a homebuilder from Savannah, Georgia. “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.” -Present conditions - increased 4 pts to 40 -Future outlook rose 2 pts to 37 -Prospective Buyers Traffic increased by 3 to 23

01/18/2023

The Yield Curve is a graph that depicts how the yields (rates) on debt instruments - bonds - vary as a function of their time to maturity.

We can use the yield curve as a future economic indicator. It can also provide us with advice on the choice between adjustable-rate mortgages and fixed-rate mortgages.

Check out my YouTube video on the topic:

The Yield Curve is a graph that depicts how the yields (rates) on debt instruments - bonds - vary as a function of their time to maturity.We can use the yiel...

01/10/2023

The Bureau of Labor Statistics (BLS) reported that were 223,000 jobs created in December, which was stronger than expectations of 200,000. There were 28,000 in negative revisions to October and November, which weakens today’s report a bit, but the headline was in line after the revisions and pretty strong. Remember, there are two surveys within the Jobs report, the Business Survey and the Household Survey. The Business Survey is where the headline job creation number comes from and includes a lot of modeling and estimations. The Household Survey is where the unemployment rate comes from and is derived from calling households to see if they are employed. The Household Survey has its own job creation component, and it showed that there were 717,000 job creations, while the labor force increased by 439,000. This caused the unemployment rate to decline from a revised 3.6% to 3.5%. The labor force participation rate increased from 62.1% to 62.3%, the highest level since last August. Looking deeper at the numbers – Of the 717,00 job creations in the household survey, 679,000 were from part-time workers and only 38,000 were full-time. This could be a lot of holiday hires or people getting part-time work - 380,000 of the total were multiple job holders, getting another job, much of which is likely part-time, to make ends meet. Average hourly earnings were up 0.3% in December and are up 4.6% year over year, which is down from the previous report – Previously it was reported at 5.1% but revised lower to 4.8%. Average weekly earnings only rose by 0.2% last month and are only up 3.1% year over year. Average weekly earnings measures actual take-home pay because it adds in the component of how many hours were worked. And that fell on average from 34.4 to 34.3, which is the lowest level since 2020. While job gains were strong, the cut in hours would equate to a significant amount of jobs lost.

01/09/2023

Are you concerned with the current climate of interest rates? Utilize rate buydown options like the Temporary 2-1 Buydown to ease into your mortgage. Pay 2% lower than your qualifying rate in Year 1. Pay 1% lower than your qualifying rate in Year 2. Go back to your normally scheduled payments after that!

Here is a video explanation:

Are you concerned with the current climate of interest rates? Utilize rate buydown options like the Temporary 2-1 Buydown to ease into your mortgage. Pay 2% ...