It’s possible that you find yourself living in a home that simply doesn’t suit you anymore, either because you have outgrown it or were compelled to purchase it within the past two years.

While it’s true that the interest rates have increased significantly compared to two years ago, it’s worth noting that once the rates reach the 5% range, the monthly payment only rises by approximately 20% compared to the existing total payment.

Have a great rest of your week.

Housing Starts in May rose by 21.7% to 1.63M Units, Which is much stronger than estimates.

Single Family starts rose 18.5% last month to 997k units. The key to future activity is the Housing Permits, which were up 5.2% last month at 1.49M units.

Completions also increased by 9.5% last month of which 3.9% were single family homes. We need inventory in a very bad way. This is a good start but not out of the woods yet.

On Friday, the Teamsters union with over 340,000 UPS workers, voted to overwhelmingly strike.

Have a great rest of this short week.

The Consumer Sentiment shows greater optimism as inflation eased and policymakers resolved the debt ceiling crisis. This is a 28% increase from the historic low of 51.5% in July 2022.

Anecdotally I have been seeing multiple offers on almost all of my clients purchases. This is backed up by Redfin recent report showing 33% of transactions have been sold over asking price.

If you are not fully underwritten by your lender, ask why and if you don’t get a good answer, let me know. The key to an accepted offer is a fully underwritten file with no conditions except the appraisal.

Have a fantastic weekend. 100 degrees in Palm Springs CA tomorrow but its a dry heat…

Below is the graph from http://www.federalreserve.gov showing Inflation projections. Yesterdays positive inflation numbers hit the bond market hard in a very odd way. We expected better rates but got the exact opposite. Today we are seeing recovery from those lows.

To put life into perspective. see below Picture from Voyager turning around to take a Pic of the Earth. Location just past Saturn.

Inflation has decreased, yet the rates appear to be persistently resistant to change, like the adhesive nature of a sticky substance.

To illustrate this, imagine tugging on an elastic band, only for it to inevitably recoil and snap back towards you. This analogy may offer a glimpse of what could potentially occur during the upcoming summer months.

Back on the road this morning for the final leg of my trip.

Half way through my road trip and the pillows are just not the same.

CPI – Consumer Price Index year over year as expected and down significantly from last year. This is favorable for the bond markets and more importantly the Mortgage rates.

Back on the road, have a great rest of the day and week.

The CPI Consumer Price Index inflation report for May will be released.

Here are the technical bits. last year 0.9%, this year (Y/Y) should come in at 0.2% showing inflation dropping from 4.9% to 4.2%. This will be a significant drop.

Wednesday the Producer Price Index report will also be released. This is the wholesale inflation number. We anticipate an already low 2.3% to go down to 1.5%.

Feds are kicking off a 2-day meeting with their rate hike decision on Wednesday 2:00pm ET. They will have the benefit of seeing both the CPI and PPI numbers before deciding on a pause or rate hike.

Driving from University of Washington (daughter) to Palm Springs this week. Love road trips but maybe not necessarily in a 20 foot U-Haul.

Zillow May Market report shows home values increased 1.4% April to May with the larges gains in the Midwest. West Coast markets have recovered from the price drops in 2022.

However, one third of home buyers expect home prices to decline. Inventory is at one of the lowest points in years.

The situation is further exacerbated by the proportion of borrowers with interest rates below 4.0%. Remarkably, 33% of FHA and VA borrowers currently benefit from rates below 3.0%. An astonishing 50.7% of VA borrowers also fall under the category of securing an interest rate below 3.0%.

From my perspective, I don’t foresee a decline in home values. Although inflation is gradually decreasing, it has not reached a point where the Federal Reserve would consider easing the Fed rate. Moreover, the inventory remains persistently low, with minimal or no incentives for it to increase.

Road Trip Monday and Tuesday so the blogs and videos will be short. Have a great weekend.

The initial jobless Claims that measure individuals filing for unemployment benefits for the first time rose 28,000 to 261,000.

The Continuing Claims, those that continue to receive benefits after their initial claim, fell 37,000 to 1.75M. This is a high level and shows that hiring has slowed.

Internationally according to European statistics office Eurostat, the euro zone has entered into a recession in the first quarter of this year. This trend appears to be continuing for the remainder of the year.

Rates have responded to this news in a positive or lower interest rate direction.

The national average for 30y mortgage rate dropped from 6.91% to 6.81% but applications for a mortgage to purchase a home fell 2% this week and 27% lower than last year according to the Mortgage Bankers Association.

Refinance applications as expected fell 1% and were 42% lower than last year.

Its about rates, its about inventory and the fear of a recession. Its Wednesday, have a fantastic rest of your week.