Weekly News (June 1, 2022)
Interest Rate (22nd Week)
(By Fairway Home Loan )
| 30 yr fx
| 15 yr fx
|10 yr Tr Y
|5 Yr Arm
|7 Yr Arm
|A year ago||2.875||2.250||2.490||1.576|
|A month ago||5.250||4.999||4.875||2.915|
Prime Rate:3.75 – 4.00% / Fed Fund Rate: 0.75- 1.00% .
- 3% Down payment for 1st home buyer is available.
- 5% Down payment 2-4 units FHA program available
- 15% Down payment 2 families -conventional program available.
- Potential home buyer — Have a pre-approval first before the shop. Now we have 48hour underwriting turn-around times for regular loans.
- Self employed borrower – Need to prepare 3 month business bank statements and the YTD Profit and Loss Statement. YTD income can’t decline more than 30% compared to last year.
- 2022 Conventional loan limit:
Conforming SFR : $647,200.00/ Conforming high balance: $970,800.00
Conforming 2 Family: $828,700/ Conforming High Balance: $1,243,050
Developer announces plans for Marcal site, destroyed in 2019 fire
( Record 6/1 )
- More than three years after a fire devastated the iconic Marcal Paper factory along Route 80, a Texas company unveiled the plans Tuesday to build a warehouse on the site for as much as $100M.
- Elmwood Park officials and Crow Holdings Development said a ground breaking is expected this summer on a 206,000 sf “state-of-the-art”, modern industrial building.
- Marcal, a major employer in the region for almost a century, saw its red brick factory and its famous neon sign destroyed in January 2019, in a blaze that required 400 firefighters from 50 North Jersey towns to quell the flames.
- Building the warehouse will generate $34M in economic activity in Bergen County and 140 short-term jobs, Crow said. The company estimates that the site will produce an additional $630,000 in property tax payments to the county, Elmwood Park and the borough school district and support the equivalent of 240 full-time jobs.
Commutes hinder Office Return
( WSJ 6/1)
- Urban areas where people live closer to work have higher return-to-office rate since the pandemic. It isn’t the office that workers heading into the city despise. It’s the commute.
- In a Gallup survey last summer, for example, 52% of those who want to work remotely listed avoiding commuting time as a top reason they don’t want to go to the office.
- Employee opposition to commuting means that landlord and cities aiming to refill their office floors may need to do more than renovate old buildings or put more police on street corners. It may require investing in housing, highways, public transportation and infrastructure necessary to reduce commute times.
- Commuting has been unpopular for ages, and economists say it hurts productivities. The average travel time to work in the U.S. increased from 25 min to 27.6 min between 2006 and 2019, according to the Census Bureau.
Amazon Slowdown Threatens Warehouses
( WSJ 6/1)
- com Inc’s decision to throttle back on its e-commerce operations threatens to slow the growth of the industrial-space sector, one of the hottest areas of commercial properties.
- The growth trends are slowing down in some markets, in part because Amazon is subleasing warehouse space after reporting in April its slowest growth in almost two decades.
- Amazon is one of largest users of U.S, industrial space, owning or leasing some 374M sf at the end of 2021, according to a Canadian supply-chain consultant that tracks Amazon demand.
- Property owners in some markets might face new competition from Amazon’s plan to sublease at least 10M sf of warehouse space, and possibly as much as triple that amount over time, as well as a flood of new supply from developers responding to the strong industrial market.
- Sales volume of industrial property fell to $6.5B in April, down 43% compared to the same of the last year, according to MSCI Real Assets.
- Market participants say that a large part of that decline was because of rising interest rates, which erode returns by increasing debt costs.
Adjustable Home Mortgage Loans Return, with Changes
( WSJ 5/31 )
- A jump in interest rates has revived demand for adjustable rate mortgages. But these loans bear little resemblance to the ones blamed for fueling the 2008-09 financial crisis.
- According to MBA, applications for ARMs, a kind of mortgage that carries a lower rate in the loan’s early years, more than doubled in April from a year earlier.
- More than 9% of mortgage applications submitted last week were for ARMs, up from 4% a year ago.
- ARMs still male up a tiny fraction of the mortgage market – 2.1% in March, up from 0.6% a year earlier. They accounted for half of all mortgages at their precrisis peak.
- There is little reason to fear a repeat of a melt-down. Today’s lenders –and borrowers – are much safer than they were in the precrisis years.
- After financial crisis, they modified ARMs : Short term teaser rates were banned, annual increases were capped, lenders and servicers must inform borrowers in writing of coming rate changes, lenders cannot penalize borrowers who refinance an ARM or pay it off early.
Big Cities Lost More residents in 2021
( WSJ 5/26 )
- Big-city population declines deepened across the U.S. last year as the pandemic continued to send Americans in search of more space, census figures showed Thursday.
- Collectively, in the nine cities with more than 1M people, the population fell 1.7%, a loss of 419,000 residents. Only two cities in that group grew – Phoenix and San Antonio.
- New York, the largest city, lost 3.5% of its residents, about 305,000 people. The second largest city, Los Angeles, lost 1%, or 41,000 while third-largest city, Chicago, lost 1.6%, or 45,000 people. San Francisco’s population fell 6.3%, a loss of 55,000.
- The onset of the pandemic in March 2020 set off an initial wave of moves out of cities. The latest census figures suggest the shift continued as the pandemic dragged on and combined with other economic and demographic forces that began pushing Americans into suburbs and exurbs during the previous decades.
Consumer confidence slips in May amid stubborn inflation
( Record 6/1 )
- S. consumer confidence edged lower in May as Americans’ view of their present and future prospects dimmed in the midst of persistent inflation.
- The Conference Board said Tuesday that its consumer confidence index dipped to 106.4 in May – still a strong reading – from 108.6 in April.
- The expectation index, based on consumer’s six month outlook for income, business and labor market conditions, also declined in May, to 77.5 from 79 in April. It was above 80 in February and remines weak spot in the survey.
- Consumers were slightly less optimistic about the labor market, even as U.S. employers have added at least 400,000 jobs for 12 straight month, pushing the unemployment rate down to 3.6%. That is lowest rate since the pandemic erupted two years ago.
Home Prices Rise at record Pace
( WSJ 6/1 )
- Home-price growth rose to a record in March as robust home-buying demand outweighed the limited supply of homes for sale.
- The S&P CoreLogic Index rose 20.6% in the year that ends March, up from a 20% annual rate the prior month. March marked the highest annual rate of price growth since the index began in 1987.
- The inventory of existing homes on the market in March sat well below normal levels for that time of year, making it difficult for buyers to compete and pushing prices higher.
- Mortgage rates have climbed swiftly since the start of the year. While higher mortgage rates have started to reduce buyer demand, home prices remain sky-high as demand continue to exceed supply.
- “Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer” said Craig Lazzara, managing director at S&P Dow Jones Indices.
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