Weekly News (August 18, 2021)

This week’s Interest Rate (33rd Week)

(By Fairway Home Loan )

 Prime Rate:3.0% / Ref IR: 0.00- 0.25% 

• Potential home buyer — Have a pre-approval first before the shop.  Now we have 48hour underwriting turn-around times for regular loans.
• 2021 Conventional loan limit:  Conforming SFR : $548,250/ Conforming high balance: $882,375/  Confirming 2 Family: $702,000/ Confirming High Balance: $1,053,000

Rent market in Queens recovered to pre-pandemic level

(Korea Times 8/17)

• According to Elliman, new lease contracts rose 150.3% in N-W Queens in July compared to the same period a year ago while it shows increase of 470%, 242.3%, 171.4% in April, May, and June.  In Manhattan it shows new lease contract increase by 54.7% while Brooklyn shows 40.3% compared to the same period of a year ago.
• The increase of new lease signals the recovery of rent market, real estate experts said.
• The median rent in N-W Queens rose to $2,850 in July, closer to the pre-pandemic level of $2,881, which shows 14.0% increase from a year ago, and shows 5% increase from the last month. 2Br rent rose 35%, 1Br rent rose 16.7%, Studio rent rose 2.1% respectively and 3Br rent dropped 5.6% while 3Br new lease contracts increased 309.1% from a year ago.

Almost a half of population in Flushing and Bayside are Asian

(Korea Times  8/18)

• As of April, 2020, Asian population grew 25.2% in Flushing and Bayside, etc (6 District) for the last 10 years. The total Asian population in District 6 becomes 43.7% to 268,633, while White population becomes 33.2%
• North of Nassau County and North-West of Suffolk County (District 3) has shown most growth (53.5%) to 143,930 for the last 10 years. The total Asian population becomes 19.5% and White population becomes 64% reduced from 78.3% ten years ago.
• In NYC, Asian population grew 33.4% and becomes 1,385,144, which becomes 15.7% of the total NYC population. White population reduced by 16.6% and African American reduced by 6.9% while Spanish population grew 6.6%.

COVID-19 Hurts Outlook for Small Business

(WSJ  8/14)

• Small business confidence dropped in August to its lowest level since early spring, as the rise in COVID-19 cases due to the highly transmissible Delta variant out a damper on expectations and turned entrepreneurs more cautious.
• 39% of small-business owners expect economic conditions in the U.S. to improve in the next 12 months, down from 50% in July and 67% in March, according to a survey of more than 500 small businesses by Vistage Worldwide Inc., a business coaching and peer advisory firm.
• The mood among American consumers darkened in the first half of August because of growing worries about Delta variant, according to the survey findings released Friday. The University of Michigan’s index of consumer sentiment plunged 13.5% from July, one of the sharpest declines since the index began in 1978.
• 22% of small-business owners in the Vistage survey said their business has already been affected by the increase in Covid-19 cases tied to the Delta variant, while another 22% expect to be affected, according to the survey of firms with $1M to $20M in revenue.

Fed Reserve and Biden Admin might try control soaring house prices

(Mijunews   8/12 )

• Fer Reserve is criticized for purchasing massive mortgage securities and keeping lower interest rates, which triggers too many would be buyers in the market. After all, mainly two factors can be considered to control: LTV(Loan To Value) and DTI(Debt to Income) ratios.
• In 2013, CFPB(Consumer Financial Protection Bureau) has decided DTI limit to 43% in order to protect general consumer à Back-end ratio. Lenders usually prefers a front-end DTI of no more than 28%.
• Higher LTV might indicate more speculative buyers who think the house price increase will buy more houses as a speculation. One of main reasons of soaring house prices is that more investors are buying more houses than real home owners.
• The current issue is that first home buyers with less money down are giving up buying their own homes.

Rent payment history will be reflected to personal credit history

(Korea Times    8/13 )

• Fannie Mae announced that they will count good rent payment history of tenant for their mortgage loan program when tenant applies the mortgage loan through Fannie Mae’s Desktop Underwriter system from 9/18/2021.
• Sample study through a poll shows 17% of mortgage applicants, who do not own their own houses for last 3 years, can be saved from unqualified loans due to lower credit scores and undesirable credit history.

Fed Eyes Tapering in a few months

(WSJ  8/17 )

• Fed Reserve officials are nearing agreement to begin scaling back their easy-money policies in about three months if the economic recovery continues, with some pushing to end their asset-purchase program by the middle of next year.
• In recent interviews and public statements, several have advocated for this time table, which would enable them to raise interest rates sooner than currently anticipated if the economy makes rapid progress toward their goals.
• The central bank in December said it would continue the current pace of bond purchases until officials concluded they had achieved “substantial further progress” toward their goals of 2% average inflation and robust employment.
• Boston Fed president Eric Rosengren said he expected to see by the Sep 21-22 meeting enough job growth to meet the criteria for reducing bond purchases. “That would set up some time this all a possible tapering that is dependent on the Delta variant and other variants not slowing down the labor markets substantially.
• The Fed now finds itself in a very different position than 2013. The economy is growing rapidly. Unemployment is much lower, at 5.4% in July. Inflation is much hotter. And bond yields have tumbled this year even as the central bank has discussed plans to reduce bond purchases.

Shopper Pullback Leads to 1.1% Drop in July Retail Sales

(WSJ    8/18)

• Spending at U.S. retailers fell sharply in July, amid cooling purchases of goods and signs of some pullback in consumer demand as U.S. Covid-19 cases tied to the Delta variant rose. Retails sales – a measure of purchases at stores, at restaurants and online – fell 1.1% last month compared to June, the Commerce Department reported Tuesday.
• The retail data disappointed stock markets. The Dow Jones Industrial Average fell 0.8%, the S&P 500 slipped 0.7%, and the Nasdaq dropped 0.9%.
• Retail sales overall continue to clock in well above monthly pre-pandemic levels. Sales in July were about $91.9B, or 17.5%, higher than in February 2020, just before the pandemic’s onset in the U.S.

Biden Calls Exit from Afghanistan “Right Decision”

(WSJ   8/17)

• President Biden said he stands “squarely behind” his decision to withdraw U.S. troops from Afghanistan, speaking from the White House on Monday as he drew bipartisan criticism over the swift collapse of the government and ensuing chaos. He said “American troops cannot and should not be fighting in a war, and dying in a war that Afghan forces are not willing to fight for themselves.”
• The exit becomes the closing chapters in the U.S.’s longest war, one that began 20 years ago after 9/11 in 2001, terrorist attacks in New York and Washington, as a hunt to bring justice to those who committed those acts.
• Biden has long said that Washington had accomplished its mission in the region by killing Osama bin Laden in 2011 and depriving al Qaeda of its sanctuary in Afghanistan, and had nothing to gain by perpetuating its military deployments in the country.

Others/Tech News: 

U.S. Auto-Safety regulators are investigating Tesla’s  advanced driver-assistance system, “Auto-Pilot”

• NHTSA said 11 crashes of Tesla vehicle since 2018.
• All vehicles were using Autopilot and struck one or more vehicles involved in a emergency-response situation.