Weekly News (May 12, 2021)
This week’s Interest Rate (19th Week)
(By Fairway Home Loan)
|30 yr fx(%)||15 yr fx(%)||FHA(%)||10 yr Tr Y (%)|
|A year ago||3.000||2.625||3.490||0.691|
|A month ago||2.999||2.255||2.625||1.664|
Prime Rate:3.0% / Ref IR: 0.00- 0.25%
- Interest rate is stable this week. The FHA and VA loan interest rates are very good
- 2021 Conventional loan limit: Conforming: $548,250/ Conforming high balance: $882,375
1st Qt Queens house price increased double digits
(Korea Times 5/7 )
- According to Elliman’s report, 1st Qt 2021 the median price in Queens was $660,000 which is 11.8% increase compare to a year ago, while it was deceased 1.2% down from the previous quarter, 4th Qt, 2020
- House price in NE area in Queens, where mostly Korean population concentrated, has increased 2.9% to $738,888 from $718,000 a year ago – Flushing, College Points, Whitestone, Bayside, Douglaston, Little Neck, Oakland Garden, Beechhurst
- The area with highest increase of 30.8% from a year ago is Rockaway. Luxury house price in LIC has increased 9.6% to $1.39M, condo price has increased 2.4% to $988,000
Residential market: A taste of the 1970?
(RELTOR May/June by Lawrence Yun )
- Inflation and rising mortgage rates will add pressure to real estate markets. Inflation is edging higher, which doesn’t foretell well for interest rates. The consumer price index rose 1.7% year over year in February after having sunk to nearly zero in the early months of the pandemic, which was driven by higher prices for used cars, utilities, meat, and health care.
- In addition, rental housing costs rose 1.5%. And while February home prices rose 15% for the year, which are not in the index. Besides causing consumer irritation, inflation can push up mortgage rates. The Fed Reserve recently said it won’t raise interest rates until at least 2023. No matter, mortgage rates will still climb.
- In 1970s-era, inflation averaged 7.1% annually, topping out at 11% in 1979 – the same rate as the 30-year fixed mortgage. The primary cause was excessive printing of money.
- Higher inflation will pressure the lenders to raise long-term interest rates, which can easily rise if lenders get nervous about inflation. The Fed Reserve can control short -term rates, but not long-term rates.
- One component to monitor is housing rents, which, before the pandemic, were rising by 3.8% annually. Rental demand softened due to the pandemic, but now that jobs are returning, vacancies are falling and rent increase may again approach 4%.
- As a first home buyers will get tougher, but current home owner/investor have fewer worries. In the 1970s, the median home price rose from $23,000 to $55,700, an average annual gain of 9.9%, which is a reminder of the wealth-building potential of homeownership and financial wellness.
Housing market is polarized
(Korea Daily 5/11)
- According to NAR, sales of houses under $250,000 has reduced 11% while houses over $1M has increased sharply by 81%, from Feb 2020 to Feb 2021.
- The reasons are 1) Extremely low inventory for houses under $250,000 2) Increased Home prices 3) Demand for bigger houses due to the pandemic 4) Life style change to bigger family living.
- People with lower income level might loose the opportunity to build up their assets which will make more wealth gap.
Home Prices Surge across the Nation amid Tight Market
- U.S. home prices rose nearly everywhere in the 1st Qt, a rapid price appreciation that shows little sign of fading soon with limited housing inventory and robust demand
- NAR said Tuesday that the median sales price for existing single-family homes was higher in the 1st Qt compared to a year ago for 182 of 183 metro areas. In 89% of those metro areas, median prices rose by more than 10% from a year ago.
- This week’s price data were the latest confirmation that the pandemic continues to reshape how and where many people want to live. Home sales rose in 2020 to the highest level since 2006 and remained strong in the 1st Qt. Economists have said the current housing boom is less risky than in the one in the mid-2000s that ended with a crush. Borrowers this time are more financially qualified, and mortgage lenders are maintaining tighter standards.
- Nationwide, the median existing-home sales price rose 16.2% in the 1st Qt to $319,200, a record high in the data going back to 1989, NAR said.
- Prices are rising so rapidly they are outweighing the benefit of rock-bottom borrowing rates. In the 1st Qt, the typical mortgage payment rose to $1,067, from $995 a year earlier.
Job Growth is sharply lower than forecast as some sectors struggle to find enough workers
- Hiring in the U.S. unexpectedly slowed in April, a sign the nation’s recovery from the pandemic still faces challenges as many businesses struggle to find workers or remain cautious about the economic outlook.
- S. employers added a modest 266,000 jobs in April, a report Friday by the Labor Dept. showed, far short of the one million that economists had forecast and the weakest monthly gain since January.
- The unemployment rate ticked up to 6.1% in April from 6% a month earlier, partially reflecting an increase in people entering the workforce.
- Some businesses are reporting they can’t find enough workers due to expanded unemployment benefits, worker’s fear of contracting Covid-19 and child-care burdens due to school closures, economists say.
- President Biden on Friday dismissed the idea that enhanced unemployment benefits are keeping people from returning to work. “I know some employers are having trouble filling jobs. But this report shows is that there’s a much bigger problem,” he said, noting the economy has eight million fewer jobs than when the pandemic began.
New Unemployment application hit the lowest record again
(Korea Daily 5/7 )
- According to Labor Department report (4/25 – 5/1), new unemployment application lowered to 498,000 on 5/6, which was much lower than experts’ forecast of 538,000.
- Continued unemployment application for minimum 2 weeks has increased 37,000 to 369,000.
- According to WSJ, the economists forecasted that the unemployment rate at the end of this year will be 1.6% lower than the end of 2019, pre-pandemic time.
Stocks Tumble on Inflation Fears, and Decline globally
- Dow falls 475 points as selloff spreads to financial, industrial and energy sectors. Investor around the world retreated from stocks Tuesday, with a selloff in technology companies spreading to other sectors as concerns about inflation dragged down U.S. indexes for a second day. (Dow fell 1.36%, S&P 500 fell 0.87%, Nasdaq fell 0.09% )
- The fall marked the blue-chip index’s steepest one-day decline since late February when worries about a sharp rise in bond yield blunted momentum in the stock market.
- Investors are keeping close eye on the sharp rise in the prices of commodities such as corn and lumber, any remain concerned about supply-chain issues and disruption of manufacturing. Companies ranging from automakers to semiconductor giants have warned supply-chain setbacks in recent months.
Others/Tech News : Colonial Pipeline Co in TX said service could be offline until week’s end due to Ramsomware attack.
- The pipeline can carry 3M barrels of fuel a day over 5500 miles from Texas to New York.
- Gas price might be disrupted accordingly.