fyi



https://www.foxbusiness.com/economy/feds-bowman-sees-no-interest-rate-cuts-year

Yea I saw that, nothing new really. I don't think it's the base case at this point but there are notable upside risks. I think it's more about the labor market at this point & which side of the dual mandate they'll favor as things continue to weaken.

First half of 24 in the books - current stats & market update:

Prices just hit new all time highs - 270,000 average (previous was 260,000) & are up 4% year over year. Up 11% since the beginning of the year. We had a nice dip last Fall but it was short lived.

Median days on market are 16 with the average at 39. Pace & activity is slower than normal but still plenty of sales.

Inventory is up significantly - 49.2% year over year. Last time we had this many homes on the market was November of 2017!

Should be an interesting 2nd half of the year. I feel pretty certain we are going to get at least 1 rate cute even if it's December. We've had a nice dip last couple of Fall/Winters in the face of higher rates but wonder if that happens this year or if prices just march on. We shouldn't see anywhere near the 8% peak last year.

There are definitely more homes on the market than at any time in recent memory.

It seems many sellers are listing at prices beyond the market (especially in the mid- to low-price range) and then having to spend a lot of days on the market before taking a lower offer.

Should be an interesting 2nd half of the year. I feel pretty certain we are going to get at least 1 rate cute even if it's December. We've had a nice dip last couple of Fall/Winters in the face of higher rates but wonder if that happens this year or if prices just march on. We shouldn't see anywhere near the 8% peak last year.

pretty doubtful that there will be a rate cut this year

https://www.cnbc.com/2024/07/02/powell-says-fed-has-made-quite-a-bit-of-progress-on-inflation-but-needs-more-confidence-before-cutting.html

i think we still see a single rate cut this year

There are definitely more homes on the market than at any time in recent memory.

It seems many sellers are listing at prices beyond the market (especially in the mid- to low-price range) and then having to spend a lot of days on the market before taking a lower offer.

Yes - we've had 4 home sales in my neighbeorhood this year -the ones which were priced in the $135-140 sq/ft (roughly $435-450k) had contracts in less than a week, those asking $150 and more went through several price reduction iterations before selling around $140-ish.

It's a very price sensitive market right now to be sure. Overall prices are at highs but it's not true across the board and lots of deals are requiring significant reductions and/or concessions. Most of my business this year has been listings and it's really a tricky market. Must be priced according to the market or it's going to sit with as much inventory as we have.

What are you seeing as far as acreage properties, like 5 ac or larger? Metro area with good schools

Powell set the stage for rate cuts sooner than later this week bolstered by more positive economic data. With the labor market significantly cooled & unemployment steadily rising a September cut is growing more & more likely. Fingers crossed we get 1 for sure and really looks like 2 cuts before end of year. That should loosen things up a bit as long as they aren't reacting to a recession all a sudden. Fingers double crossed.

Powell just teed up a September cut and likely more soon to follow if the data doesn't go sideways & something unexpected between now & then. We are going to get multiple cuts this year after all it would appear. It's already priced into mortgage rates- they are at 5-6 month lows.

Woot!

With the very poor recent jobs report, it appears the Fed has waited too long to start bringing interest rates back down.

With the very poor recent jobs report, it appears the Fed has waited too long to start bringing interest rates back down.

the problem is that inflation is still well above the 2% target

With the very poor recent jobs report, it appears the Fed has waited too long to start bringing interest rates back down.

Yep, they missed it again just like '21. It's ridiculous. Should be good news for the real estate market though depending upon the severity of the job losses before they can start to react. OKC hopefully well insulated thought.

We might get a large cut in September instead of a .25. Bond action today was off a cliff along with the VIX. We might see gov't mortgage rates in the 5's soon.

the problem is that inflation is still well above the 2% target

PCE is only 2.5% - the primary gauge. CPI would be quite a bit lower and really they're both at target if it weren't for the very misleading way housing & rents are calculated & weighted.

With the very poor recent jobs report, it appears the Fed has waited too long to start bringing interest rates back down.

This fed waits too long to do everything. They are too tentative.

This fed waits too long to do everything. They are too tentative.

Powell has been Chair for 6.5 years now. He should be replaced in about 1.5 years.

With the very poor recent jobs report, it appears the Fed has waited too long to start bringing interest rates back down.

https://www.cnbc.com/2024/08/21/nonfarm-payroll-growth-revised-down-by-818000-labor-department-says.html

Very strong evidence the labor market is much worse than what they’ve led us to believe. No surprise if you’re following the data & not just listening to gov speak but this confirms it.

We are going to get multiple reductions this year after all beginning next month.

We are going to get multiple reductions this year after all beginning next month.
As someone that’s had a house on the market for over a month, this is welcomed news.

As someone that’s had a house on the market for over a month, this is welcomed news.

Yea great news for sure. The demand hasn’t come back yet even though rates have already had a big drop in anticipation but it’s coming. Hopefully once they confirm it next month. We’re likely to get another bad unemployment report between now & then though which may cause some jitters.

There’s too much fear & uncertainty right now.

https://www.cnbc.com/2024/08/21/nonfarm-payroll-growth-revised-down-by-818000-labor-department-says.html

Very strong evidence the labor market is much worse than what they’ve led us to believe. No surprise if you’re following the data & not just listening to gov speak but this confirms it.

We are going to get multiple reductions this year after all beginning next month.

What data would that be specifically?

What data would that be specifically?

The job reports have been a trend getting revised down for awhile now- GDP as well gonna take a big fall on the revision like Q1. The way certain things are quantified & measured, like how they weigh housing for example lead to some really misreported & not accurate numbers. They can't see the obvious it would seem (see 2021!) just highly sophisticated technical data & models which is far backward looking. As I've really began to study some of this intently the last few years as well as managing all of my equity investments I've gained a much greater insight.

I'm not quoting any article or source just speaking generally to closely following and analyzing a lot of economic data, sources, reports, etc. The economy has been pretty propped up by massive federal spending & to some degree federal job creation as well. The private sector has not been rosy for awhile now and unemployment rate has rather quickly gone from 3.5 to 4.3% and those numbers are understated in all likelihood & gonna go up from here. Those are still low historically but they are higher than what we had from 17-20 when the pandemic hit and an object in motion tends to stay in motion.

They just lost 818k jobs in the last year so they've been overstating them by nearly 70k a month lol. Biggest downward revision since 09.

This is all just my opinion but reports like today's are saying what I've been telling people. I sell real estate but I live in the equities markets & closely follow the economy. I've been investing since I was in my early 20's and while I don't day trade I would say i'm nearly up on the markets as what some of those guys do just watching all of my own stuff & of course using any knowledge and insights to help clients day to day selling real estate.

https://www.cnbc.com/2024/08/21/nonfarm-payroll-growth-revised-down-by-818000-labor-department-says.html

Very strong evidence the labor market is much worse than what they’ve led us to believe. No surprise if you’re following the data & not just listening to gov speak but this confirms it.

We are going to get multiple reductions this year after all beginning next month.

There is a massive expectation that we will see a decrease in September, for sure and then I heard after the election. Are you hearing otherwise?

There is a massive expectation that we will see a decrease in September, for sure and then I heard after the election. Are you hearing otherwise?

Future markets have a 100% probability of a cut next month the only question is quarter point or half point.

Labor market has deteriorated more than they thought & I think it’s highly likely now we see at least 2 cuts this year. If the Fed is as far behind the curve as they were in 2021 they may have to overcorrect.

The next jobs report on 9/6 will probably determine size of the cut in September.

Future markets have a 100% probability of a cut next month the only question is quarter point or half point.

Labor market has deteriorated more than they thought & I think it’s highly likely now we see at least 2 cuts this year. If the Fed is as far behind the curve as they were in 2021 they may have to overcorrect.

The next jobs report on 9/6 will probably determine size of the cut in September.

with inflation still almost 3% i would we shocked if they cut a half point

with inflation still almost 3% i would we shocked if they cut a half point

As of now it’s 75% chance we get a quarter point.

Depending on the data between now & then though, like unemployment ticking up unexpectedly again, a half point is on the table. Fed President Harker said so today. Powell speaks tomorrow so we’ll know more.

Overall though they’ve been favoring the inflation side of the mandate more as opposed to the unemployment side but that is no longer the case.

Powell just confirmed the pivot, 100% chance of rate cuts next month. The market will finally be right after 2 years lol. He seemed concerned about the risks to the labor market at this point vs inflation. Hopefully they aren't as far behind the curve as '21. It will be interesting to see how much & how quick they have to ease to keep unemployment rate from spiking.

How much will a 1/4 pt drop in mortgage rates change someones monthly payments for a new buyer on a 250K house with say a 700-750 credit score which is probably average. I don't know if that is. Do you know what the average first time home buyer's average credit score and what is the average % a first time home buyer has to put down on a $250K house? Figure a 30 year mortgage. I guess I'm wondering if that will really make much difference in someone who won't buy now vs someone who will buy after a 1/4 pt drop.

How much will a 1/4 pt drop in mortgage rates change someones monthly payments for a new buyer on a 250K house with say a 700-750 credit score which is probably average. I don't know if that is. Do you know what the average first time home buyer's average credit score and what is the average % a first time home buyer has to put down on a $250K house? Figure a 30 year mortgage. I guess I'm wondering if that will really make much difference in someone who won't buy now vs someone who will buy after a 1/4 pt drop.

So mortgage rates mostly follow the bond market and 10-year treasury yield. Those are already down over 1% - 1.25% overall last few weeks on the speculation. A quarter point cut probably won't actually drop the rates any at all from here- it's already baked in. A half point cut would be more than expected and we'd likely see mortgage rates fall further.

Right now you would save about $200/mo on a $250k house with a 5% downpayment based on where the rates were a few weeks ago vs today.

Does the average first time home buyer have 12.5K to put down on a house?

I was speaking with a mortgage broker literally yesterday who told me that the anticipated rate reductions are already generally baked into mortgage rates. due to the cuts in recent weeks mentioned above. He suggested that they are unlikely to move again significantly, at least for a while, probably until the NEXT rate cut is on the horizon. He said mortgage rates are generally not lockstep with the Fed.

Does the average first time home buyer have 12.5K to put down on a house?

Some certainly do, some certainly don't. It's not that much money though. If I could save $10k in a year from 08-09 making $45k/year on single income it's not that hard. They can also get down payment assistance or a gift from family member to help. If Kamala wins she's proposing $25k for first time buyers.


I was speaking with a mortgage broker literally yesterday who told me that the anticipated rate reductions are already generally baked into mortgage rates. due to the cuts in recent weeks mentioned above. He suggested that they are unlikely to move again significantly, at least for a while, probably until the NEXT rate cut is on the horizon. He said mortgage rates are generally not lockstep with the Fed.

Precisely. I am telling people to really consider the opportunity of the present moment. Waiting for rates to come down more when they've already had a significant drop in a short time & not likely to reduce a whole lot more in the short term could be another valuable lesson on opportunity cost.

Think about how much fear & uncertainty was in the market in 2020.. almost everyone would go back and buy real estate then if they could. When buyers flood the market again next year & beyond as these rates gradually drift to a more neutral level what do you think prices will do in the meantime?

While we don't know for certain what the future will bring I do know that in times of great uncertainty & fear both in the real estate market & stock market it's where the money is really made if you're smart.

Home Equity products tend to run in line with the Fed and that's not an insignificant part of real estate borrowing. Certainly not as important, but there are definitely people out there who would be more inclined to borrow equity at lower rates for things they want to do.

Even if Fed rates don't drop much further, it's hard to imagine seeing them go back up after September for a good while. That should at least keep 10-year Treasury and therefore Mortgage rates relatively where they are right now. So people who can afford it may drag their feet on refinancing hoping for a better rate, but they'll come around eventually.

The real question is how much further does it need to come down for the sub 4%ers to start selling the homes they've been wanting to get our of?

Home Equity products tend to run in line with the Fed and that's not an insignificant part of real estate borrowing. Certainly not as important, but there are definitely people out there who would be more inclined to borrow equity at lower rates for things they want to do.

Even if Fed rates don't drop much further, it's hard to imagine seeing them go back up after September for a good while. That should at least keep 10-year Treasury and therefore Mortgage rates relatively where they are right now. So people who can afford it may drag their feet on refinancing hoping for a better rate, but they'll come around eventually.

The real question is how much further does it need to come down for the sub 4%ers to start selling the homes they've been wanting to get our of?

Everything I've read from analysts is they predict the "lock-in" effect to remain in place for several more years but it should gradually dimish and the rates go down. Eventually people have to move for variety of reasons but although it will still constrict supply for the years to come I do think more of those folks may sell than anticipated especially if prices start to take off again. Most have such a large equity position that they can overlook the 2x payment in some cases.

Everything I've read from analysts is they predict the "lock-in" effect to remain in place for several more years but it should gradually dimish and the rates go down. Eventually people have to move for variety of reasons but although it will still constrict supply for the years to come I do think more of those folks may sell than anticipated especially if prices start to take off again. Most have such a large equity position that they can overlook the 2x payment in some cases.

I'd think a lot will also depend on how many Boomers still need to retire and downsize. So much of the future depends on how this transfer of wealth from boomers really takes place.

I refinanced in November 2020 to a 20 year note with the same payment I had on my 30 year note, and got a sub-2% rate. I will likely never sell it, because that is insane. Hopefully rates go down to where if I want to move in the future, I can do so reasonably. I am hoping in 2 years to move to the north side of OKC.

But any rate drops will help immensely!

We had the unfortunate timing of building and moving in 2022-23. We went from a 2.75% mortgage to 7.65 and was glad to get that rate at the time. Thank God VA loans are easy to refi and rates are already 2% under last year. I'll even gladly pay some points for 5.625% now.

Inventory has exploded the last couple months. We have more homes listed in our MLS right now than we've had since August 2013! There are some deals to be had right now for sure.

Inventory has exploded the last couple months. We have more homes listed in our MLS right now than we've had since August 2013! There are some deals to be had right now for sure.

A deal compared to what? 2021?

A deal compared to what? 2021?

It's a buyers market all a sudden, have seen some serious concessions & price reductions. More favorable conditions than prior to Covid. When we look back at this point in the near future it's going to look like a great time.

It's a buyers market all a sudden, have seen some serious concessions & price reductions. More favorable conditions than prior to Covid. When we look back at this point in the near future it's going to look like a great time.

It seems like the prices are still high on houses. Even basic houses in the central core of the city are listing for $180-$200/sf. Is that just the new normal or do you think the market will start to correct itself?

It seems like the prices are still high on houses. Even basic houses in the central core of the city are listing for $180-$200/sf. Is that just the new normal or do you think the market will start to correct itself?

We are experiencing a correction in real time right now, prices are off the all-time high from a couple months ago. I think it's more than likely short lived- maybe into early next year. Lot of people watching the Fed & rates and also the election. We are already seeing some rates in the 5's and when they go down a touch more I think it will be a different story again. 2025 as it looks now should be huge year for real estate. We have several years of pent up demand.

It seems like the prices are still high on houses. Even basic houses in the central core of the city are listing for $180-$200/sf. Is that just the new normal or do you think the market will start to correct itself?

if rates drop any appreciable amount prices will go up ..

It's a buyers market all a sudden, have seen some serious concessions & price reductions. More favorable conditions than prior to Covid. When we look back at this point in the near future it's going to look like a great time.

Now to get the interest rates back down...

I'm getting flooded with letters wanting me to refinance below 5%

Homes in my neighborhood are staying on the market longer and while there are usually concessions, we still see record $/SF closings.

Real estate always, always goes up in the mid- and longer-term. There can be short-term fluctuations but those waiting on the sidelines hoping prices will drop are just making it harder on themselves. You can always refi if/when rates drop.

Homes in my neighborhood are staying on the market longer and while there are usually concessions, we still see record $/SF closings.

Real estate always, always goes up in the mid- and longer-term. There can be short-term fluctuations but those waiting on the sidelines hoping prices will drop are just making it harder on themselves. You can always refi if/when rates drop.

Pretty much-this is not a time time to be on the sidelines. It's actually a time to buy and walk into instant equity. Prices overall are still near record highs but the net price when it's all said and done maybe 20-30k difference there which is huge. It's opposite of what we had 2-3 years ago paying 20-30k or more over.

As soon as these rates drop a little more and people realize it doesn't matter who wins the election it should be game on again.

^

Besides small and very short-term fluctuations, home prices are always at record highs.

I'm getting flooded with letters wanting me to refinance below 5%

We bought our house in January of this year at 7% on a 30 year mortgage and paid 20% down (to avoid PMI). I spoke with mortgage broker last week who said we could refi at 5.85% on a 20 year, but the closing costs would still be $5,000. We are not wanting to do this again in a year or two, so we are going to wait until the rates get down to high 4's, low 5's. That also means commercial real estate rates will be in the mid to high 5's, which make it better for people borrowing.

^

Besides small and very short-term fluctuations, home prices are always at record highs.

Is this true or is this a California mindset? On the other hand we have printed a lot of dollars in the past few years so this will probably be the case going forward.

Is this true or is this a California mindset? On the other hand we have printed a lot of dollars in the past few years so this will probably be the case going forward.

Housing has always gone up. Maybe 2008 the crash knocked prices down a bit but they kept going up after. My house purchased in 2013 has had a 82% increase in value as of this year. I have done 0 major renovations.

I would not at all be surprised to see housing in OKC 10-15% higher by this time next year. It might not seem like it but the market is down and we're at an inflection point here.

If interest rates continue to fall, I see a lot of pent up demand. Of course, my mantra being if we could land some huge corporate jobs, it will push the local real estate market to a new level!

Ok, Ok realtor and others, what do you see going forward the market for acreage properties close in as in Edmond. I am asking in the 5 to 20 ac range. What do you see as the demand as well as prices going? Where do you think the market will be next spring? Anyone have some educated guesses? thanks.

We bought our house in January of this year at 7% on a 30 year mortgage and paid 20% down (to avoid PMI). I spoke with mortgage broker last week who said we could refi at 5.85% on a 20 year, but the closing costs would still be $5,000. We are not wanting to do this again in a year or two, so we are going to wait until the rates get down to high 4's, low 5's. That also means commercial real estate rates will be in the mid to high 5's, which make it better for people borrowing.

Assuming you don't have any prohibitions on refinancing now, if I were you, I'd pull the paperwork from your last closing and then reach out to the title company that closed you and see if they could approximate the costs if you were to refinance and run through them - ask them what they could discount in comparison to your previous closing costs. From there, you could call around to a few banks and see if they can quote a rate/points + origination fee(s) for you and see if that + your title company's estimates works for you.

Even if you end up waiting it's not bad to have a few bankers chasing you for the next year for when the rate drops to what you're really looking for.

Ok, Ok realtor and others, what do you see going forward the market for acreage properties close in as in Edmond. I am asking in the 5 to 20 ac range. What do you see as the demand as well as prices going? Where do you think the market will be next spring? Anyone have some educated guesses? thanks.

At any time between now and the future you could sell the property and make a nice profit. If the Realtors are to be believed the longer you keep the more, it will go up in nominal terms.

Fed delivers a large .50bps cut..

Woot!

More to come later this year as well.They waited and held them higher & longer than anyone anticipated and now appears they need to lower them quicker. I think they made the right call today all things considered vs starting with a nominal .25bps.

Fed delivers a large .50bps cut..

Woot!

More to come later this year as well.They waited and held them higher & longer than anyone anticipated and now appears they need to lower them quicker. I think they made the right call today all things considered vs starting with a nominal .25bps.

If nothing else, I think it allows them to get data quicker on how the lowering impacts inflation throughout Q1 and really even a little with Q4. If they see any significant uptick, they know they can probably hold off on cutting in early 2025.

I'd assume mortgage rates come down slightly more than they did in August but the bigger deal more immediately will be the relief on things like personal loans, credit cards, and other types of lines of credit.

Going to be interesting to see how far down High-Yield Savings drop...it was nice to sit on pure cash and get 4.5% but, those days are gone.

If nothing else, I think it allows them to get data quicker on how the lowering impacts inflation throughout Q1 and really even a little with Q4. If they see any significant uptick, they know they can probably hold off on cutting in early 2025.

I'd assume mortgage rates come down slightly more than they did in August but the bigger deal more immediately will be the relief on things like personal loans, credit cards, and other types of lines of credit.

Going to be interesting to see how far down High-Yield Savings drop...it was nice to sit on pure cash and get 4.5% but, those days are gone.

Yea getting that free cash in a money market/savings has been nice. Money moves in the literal sense & I think equities/real estate will be the biggest beneficiaries as this broadens out with more cuts coming. I've been waiting on this moment for a long time & already seeing things move just after the Fed meeting yesterday. I'll either be shifting a lot of money into equities or once real estate transactions stabilize a bit I'll just buy a rental. It's a great time.

Assuming you don't have any prohibitions on refinancing now, if I were you, I'd pull the paperwork from your last closing and then reach out to the title company that closed you and see if they could approximate the costs if you were to refinance and run through them - ask them what they could discount in comparison to your previous closing costs. From there, you could call around to a few banks and see if they can quote a rate/points + origination fee(s) for you and see if that + your title company's estimates works for you.

Even if you end up waiting it's not bad to have a few bankers chasing you for the next year for when the rate drops to what you're really looking for.

I do commercial lending so I have a lot of the contacts at banks and then title companies as well. We used Old Republic Title who I have used for millions of dollars of loans so they give me a pretty good deal. That's a good idea to reach out and ask them what it would cost to update the title work. I also know there will be a fee associated with it and I don't want to pay that now and then in another year. Thanks for the advice.

My business partner and I have a lot of commercial loans for different properties. We have had good luck calling our bankers and asking for rate reduction. Usually not an issue as we do alot with them but they also know we have great relationship with several banks that would gladly refinance the note.