Shelter Six:  Regulatory Relief Act Signed Into Law

May 29, 2018 by · Leave a Comment 

1. On Thursday, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act into law.

2. This act represents the largest rollback of bank regulations since the financial crisis, improves consumers’ access to credit, and streamlines mortgage TRID requirements.

3. Italy formed a new government last week increasing uncertainty around whether the country will remain in the European Union (EU).

4. April Existing Home Sales fell a bit from March but were close to last year’s level, while New Home Sales also fell a little from March but were 11.6% higher than a year ago.

5. April’s inventory of Existing Homes was at a 4-month supply (6.3% lower than a year ago), while New Homes was at a 5.4-month supply (12.4% higher than a year ago).

6. Mortgage rates have now increased 15 out of the first 21 weeks of 2018, which is the most weeks with an upward increase since Freddie Mac began tracking this data in 1972.

Rate Update

Uncertainty with Italy forming a new government and the U.S. cancelling a summit with N. Korea influenced mortgage rates lower last week and down from recent 7-year highs.

This Week

The Core PCE Price Index is due out on Thursday while both the Employment Report and the ISM National Manufacturing Index are due out on Friday.

Shelter Six:  No Tax Returns Required for Investment Property loan

May 21, 2018 by · Leave a Comment 

Shelter’s new SmartVest program allows an experienced real estate investor to buy up to 15 financed investment properties with no income documentation or debt ratio calculation.

The qualification on a SmartVest loan is based on a property cash-flow analysis and allows investors to close in the name of an LLC with interest-only loan options.

Consumer spending accounts for about 70% of US economic activity and Retail Sales is the key economic report that investors watch each month that monitors spending.

Following the hurricanes last fall, Retail Sales showed strong gains for 3 months before posting 3 months of losses causing investors to worry that economic growth was slowing.

Last week’s Retail Sales report bucked the recent trend and showed a very healthy .3% increase in April spending from March.

The market is now pricing in a near 100% probability that the Fed will increase short-term rates by .25% in June with a 70% probability of another .25% hike in September.

Rate Update

A speech last week from the governor of the Bank of France hinting that a European rate hike might come sooner than expected was the catalyst for mortgage rates jumping to the highest level in seven years.

This Week

New Home Sales will be released on Wednesday, Existing Home Sales on Thursday, and Durable Orders on Friday.

Shelter Six:  Home Price Appreciation Continues to Surge

May 14, 2018 by · Leave a Comment 

1. Metro Atlanta home prices surged 6.5% in February outpacing the national average of 6.3%, according to the latest S&P CoreLogic Case-Shiller Index.

2. March Existing Home Sales were up 1% from February and were about the same as this time last year.

3. March New Home Sales were up 4% from February, were 9% higher than a year ago, and now make up 11% of the total market.

4. New Home Sales peaked as a percentage of the market at a high point of 17% in June 2003 during the building boom and bottomed out at 5.4% in 2010 during the foreclosure crisis.

5. Inventory was down to a 3.6 month supply in March with 1.67M homes for sale, down 7.2% from a year ago and at the lowest level since data was kept in 1999, according to NAR.

6. Despite a small pool of unemployed workers to choose from, March job openings jumped to a record level of 6.55M, a significant sign of strength for the labor market.

Rate Update

With little major news last week and not much reaction to the economic data, mortgage rates ended the week slightly higher.

This Week

Retail Sales will be released on Tuesday with Industrial Production and Housing Starts out on Wednesday.

Shelter Six:  Unemployment Drops to 3.9%

May 7, 2018 by · Leave a Comment 

1. The economy added 164K jobs in April.  Although 190K were expected, upward revisions added 30K jobs to results for prior months bringing net gains very close to expected levels.

2. The unemployment rate declined from 4.1% to 3.9%, the lowest level since December 2000.

3. The decline in Unemployment was mostly due to workers leaving the labor force rather than job gains, so it was not necessarily viewed as a sign of strength.

4. As widely expected, the Fed made no change to the Federal Funds rate on Wednesday and the meeting caused little change in investor expectations for the pace of future rate hikes.

5. The Census Bureau reports that the Homeownership Rate held steady at 64.2% in the 1st Qtr of 2018, unchanged from the prior quarter and still at the highest level since 2014.

6. The Homeownership Rate is up from 63.6% in the 1st Qtr or 2017 and is now higher than last year for the fifth consecutive quarter.

Rate Update

Despite a wide range of major economic news, it was a very quiet week for mortgage rates, which ended the week nearly unchanged.

This Week

The JOLTS report, which measures job openings and labor turnover rates, will come out on Wednesday while the Consumer Price Index (CPI) will come out on Thursday.