Las Vegas Market Watch

MORTGAGE RATES DIP DOWN AGAIN GIVING MORE BUYING POWER

December 13, 2022
By Bill Smith
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Dr. Lawrence Yun, Chief Economist For NAR 

Mortgage rates fell for the 4th straight week after crossing above 7% in October and early November. This week average rate on 30-yr fixed was 6.33%.

$300,000 loan at 7.1% peak rate meant $2016 monthly principal and interest.

$300,000 loan at 6.33% current rate means $1863.

There is more room to fall. An unusually large spread between 10-year Treasury yield and 30-year mortgage still exists. This bizarre situation generally goes away after several months.
If we had a normal spread of 180 basis points then the mortgage rates would be at 5.2%. Maybe this will be the case come spring home buying season.

Even with the increasing number of layoffs in some industries, the overall job market remains strong. Another 263,000 net new payroll jobs were added in November. The hourly wage rate grew by 5.1% from a year ago. The unemployment rate remains tight at 3.7%.

Generally, a strong job market at this phase of the business cycle with high consumer price inflation would mean a more aggressive interest rate hike by the Federal Reserve.

A job cutting recession if it were to occur in 2023 will weaken some the data. BUT – We have a bizarre labor market currently with nearly twice as many job openings as there are unemployed people searching for a job.

Home prices declined by 30% during the GREAT RECESSION of 2008-2009.


The Current Housing Market Is On Much Solid Foundation This Round.

Here are the fundamentals related to the current market versus 2008-2009.

- No shady self-imploding mortgages with current borrowers needing to meet the ability to repay standards.
- Fewer new single-family home construction
- Far fewer homes on the market
- Historically low mortgage delinquencies and foreclosures.
- After a difficult period in recent months for home sales, the falling mortgage rates and net new job additions should help support housing demand going forward.

 

CHANGES MEAN CHANCES
More and more renters are realizing that sellers will assist with buying down their interest rate.
Many lenders are catering to first time home buyers with low down payments, grant programs, and educational materials.

This chart shows the payment result of interest rates. It is the time to buy. If rates go down in the future, the buyer can refinance. Remember that the interest is a tax deduction.

 

Renters Don’t Get A Deduction And They Are Paying 100% Interest.

 

Just a sample of the information in my guide.

Click Here To Get My Current Buyers Guide.

December 13, 2022
By Bill Smith