Current Market Alert

The cost of borrowing of a business, borrowing funds is still going up trying to slow down the spending that Americans and businesses are doing to inflict pain, right? We talked about this, that the Fed is trying to inflict pain. The Fed is trying to slow the roll to just slow down demand, slow down buying and allow supply chains to catch back up again.
The cost of everything is just not going to drop like a rock, but it's going to slowly get there where the cost of the things that we experience at the gas station, at the grocery store are going to start coming back to Earth, right? So let me point out a couple things.
So the cost of shipping; shippers have already said that they expect to realize a benefit in lower costs early 2023. So we're seeing these indexes that some of the things that's costing them, like the cost of gas is less? Some of their expenses are less. They're expecting that cost to then be passed on to the wholesalers, which will be measured in the PPI early 2023. Again, nothing happens overnight, but check out this drop. We saw 4.9% drop month-over-month, which dropped the annual percentage from 21% in September to 11% in October. Now that's a big drop given where we had been because we had seen it much higher than that, even upwards of 21%. So to see that kind of annual growth coming down tells you that the shippers are going to start passing on lower costs to the producers and the wholesalers and those wholesalers.
We saw the PPI came out this morning and it dropped from an 8.4% annualized to an 8% annualized. It was expected to come out at 8.3%. The month-over-month was only 0.2% and that was expected to be 0.4%. So all of that is showing that the annual is coming down because the month-over-month increase is slowing down. So the shipping is costing a little bit less. The cost of shipping, of getting the products from the ports to the fact or to the warehouses. That shipping cost is costing less. The wholesalers, their cost of goods, their cost of acquiring that product to then turn into the consumer based product. So that wholesale price is coming down. We saw on Thursday's report, the CPI came down, it was expected to have a month over month of double what it actually had.
The value and the equity that we have in our homes is abundant, even if it comes down slightly based on our expectation of our equity over the last two years.
We are still strong in equity. We're strong in savings. Many of us, many  us still have jobs. There's still job openings. GDP is expected to be positive this fourth quarter, which says that the economy is still churning and people are still buying all of these things way towards a strong economy, which is where I'm going to land. This plane also lands to a very strong real estate market.
Listen to this full episode. The summary is That's it. That's what it comes down to is the balance of supply and demand.  

I want to talk about interest. I want to make this all about what's going on with the fear around interest rates. When are they going to come back down? That's a huge question right now, and I'm bringing it up because I'm getting asked that a lot.
I was on a Market Trends committee meeting yesterday with DMAR and that also became a debate, whether it was going to be eight months or 24 months from now before we see some sort of drop in interest rates. We have experts on Housing Wire and on Fannie Mae, Freddie Mac and NAR, all confessing some predictions about interest rates.
The Federal Reserve has a single mandate at this time. They are typically a two-mandate agency working on the things that people purchase, the price that people purchase things at, which is really inflation controlling the price that Americans pay for the products they buy. And then the second thing is providing a space where those people who want to work can find jobs. This is keeping unemployment low and keeping inflation low. Right now we've got a lot of wage inflation, which is driving up our overall inflation, our core inflation if you will. We've got headline and we've got core, and I'm really talking and focusing on core because headline right now is coming down because gasoline is coming down, but core is staying strong. So as I'm looking at interest rates over the next two to three quarters, I'm really watching employment, specifically unemployment, because when unemployment starts to go up, the feds measure right now, their target is 4.4.
Headline inflation一commonly known as the CPI一includes more volatile food and energy price data, whereas the core inflation index excludes it. Headline inflation is better, but core is concerning.
There are still core components to inflation that are holding on. The biggest one is wages. The Fed wants to calm wages, they want people lose their jobs and go get another job for less money. They want people to stay unemployed for a short period of time to stop spending. They need demand and supply to come back in check that is going to control inflation and allow it to drop back down again, which is going to help our bonds and our interest rates. It hinges on employment.
I still believe that we're not in a recession yet. We're seeing manufacturing slowing down. We're seeing unemployment that went the wrong way. Unemployment has to go up all the things. That is why I think we're going to see interest rates dip at the end of next spring.
Listen to the full episode for more details on this logic and insight from Nicole in this episode of The Double Comma Club, "Focus On the Payment, Our Economy Works In Cycles."

So while we were sleeping, we were seeing the European bonds were selling off, which we opened up Monday morning to this bond selloff here in the United States, dropping the bond prices and raising our interest rates.
Powell was just in Switzerland trying to speak to the Switzerland bank and convince them that he's got everything under control. I'm gonna debate that right now. I think they were a little late to the party.
It's starting to become habitual that he's not really forecasting what's happening because he's looking at metrics that are passed. He's primarily looking at unemployment, which isn't a leading indicator. It's a lagging indicator. He's looking at inflation, which is also looking backward.
If you also look at the CPI numbers, the inflation numbers that we're comparing year-over-year inflation to, we're going to start seeing inflation slow down again second quarter next year. And that's because of comparison inflation rates right now we're very low last year, so we're replacing them with high numbers. We're replacing really low numbers and that's keeping inflation high. As those numbers increased last year, that comparison rate is now becoming more in line. We'll start to see that happening in October.
So if rates are at seven or above seven depending on, we are seeing a little bit of the bond market revert back from its extreme yesterday. It's like, oh wait a minute, that was the European market that set our markets on fire. It wasn't even anything in the United States. It was a sell-off of bonds in Europe that caused our bond market sell-off the next morning Monday morning. So Powell goes through all of these conversations to say during the last Fed meeting, "I'm going to define what I want to see in a housing correction." A housing correction includes two things from his perspective, those two things are increased housing supply and decreased housing demand. Come on, that was a given.
Listen to this complete episode, "How Does the Global Market Movement Influence the US Real Estate Market."

There's good news for homebuyers! I understand that affordability is being put to the test. We just saw a 44% increase in prices and a 3% increase in interest rates. We also just saw the new conforming loan limit increase to $715,000! This is HUGE! The current conforming loan limit is $647,200, meaning those homebuyers that might not qualify for a jumbo loan or need a quicker close now have the means to make it happen! Much more of the market now falls within this conforming loan limit.Along with the good news, there is some bad news. Inventory is decreasing. But let's not panic. This is seasonal. It typically starts to turn the corner in October, but we saw that much earlier with the rise in interest rates. The opportunity for homebuyers is less demand and a higher conforming loan limit. 
 

What's Next for the Housing Market? Is it BOOM OR GLOOM?We've experienced an incredibly volatile housing market over the last two years. It was full of huge equity gains, rising home prices, and little inventory. So, what's next for the housing market?!
Is the housing market going to crash? Will we enter into a recession? What happens to housing in a recession? Is now still a good time to buy a home?
I hope this episode answers a lot of your questions and will help show you that the housing market is still strong!
 
Nicole Rueth, SVPThe Rueth Team Powered by OneTrust Home Loans750 W Hampden Avenue, Suite 500 Englewood, CO 80110303-214-6393www.TheRuethTeam.comConnect on social media: Follow me on FB: https://www.facebook.com/theruethteam/Twitter: https://twitter.com/nicoleruethLinkedin: https://www.linkedin.com/company/theruethteam YouTube Channel: https://www.youtube.com/channel/UCPMdb94tUNMMsUTgdWRMDKwNicole Rueth (NMLS 239840) is licensed to practice on behalf of OneTrust Home Loans (NMLS 46375) in the states listed below. For full compliance verbiage, visit theruethteam.com/compliance/.AZ, CA, CO, FL, ID, IL, IN, KS, MI, MN, MS, MO, MT, NE, NM, NC, OK, OR, TN, TX, UT, VA, WA, WI, WY.
 

Fed Chair Powell stated the Fed is creating a "bridge period" of "demand exhaustion".   This is being interpreted as the Federal Reserve is killing the housing market.  I get it.  But what I see is first-time home buyers getting the reset, the break they've been needing and asking for.  Plus, with the housing market as strong as it is... it's hard to justify a bust coming. I guess it's all how you look at it.
Please know: The Fed Rate and mortgage rate are not sisters, but they are cousins.
This is what's been happening with the greed of home sellers, the FHFA, and banks.
Buyers are struggling more so than ever before.
Cancelations have gone way up because of the higher interest rates.
Policies have come out that devastated pricing.
There is an increase of inventory - double of last year - but it's way below normal balanced markets. 
We're not going to see a massive drop in prices, people will just stop selling.
It's all about perspective. Buyers have to be reminded of the strength in our housing market and that there is still opportunity!
 
Nicole Rueth, SVPThe Rueth Team750 W Hampden Avenue, Suite 500 Englewood, CO 80110303-214-6393www.TheRuethTeam.comConnect on social media: Follow me on FB: https://www.facebook.com/theruethteam/Twitter: https://twitter.com/nicoleruethLinkedin: https://www.linkedin.com/company/the-rueth-team-fairway-independent-mortgage/YouTube Channel: https://www.youtube.com/channel/UCPMdb94tUNMMsUTgdWRMDKwNicole Rueth (NMLS 239840) is licensed to practice on behalf of OneTrust Home Loans (NMLS 46375) in the states listed below. For full compliance verbiage, visit theruethteam.com/compliance/.AZ, CA, CO, FL, ID, IL, IN, KS, MI, MN, MS, MO, MT, NE, NM, NC, OK, OR, TN, TX, UT, VA, WA, WI, WY.
 

🔥🔥🔥 Rates Down, Inventory Up, Holiday Weekend... GO TIME! The 10-year treasury surprised me this morning.
Listen to this and you will have 5 options of how to take advantage of the sudden drop in interest before the wave goes back up.
Call Nicole Rueth ASAP to take advantage. She's here all day because SHE LOVES these opportunities.
Nicole Rueth, SVPThe Rueth Team750 W Hampden Avenue, Suite 500 Englewood, CO 80110303-214-6393www.TheRuethTeam.comConnect on social media: Follow me on FB: https://www.facebook.com/theruethteam/Twitter: https://twitter.com/nicoleruethLinkedin: https://www.linkedin.com/company/the-rueth-team-fairway-independent-mortgage/YouTube Channel: https://www.youtube.com/channel/UCPMdb94tUNMMsUTgdWRMDKwNicole Rueth (NMLS 239840) is licensed to practice on behalf of OneTrust Home Loans (NMLS 46375) in the states listed below. For full compliance verbiage, visit theruethteam.com/compliance/.AZ, CA, CO, FL, ID, IL, IN, KS, MI, MN, MS, MO, MT, NE, NM, NC, OK, OR, TN, TX, UT, VA, WA, WI, WY.
 

Strap in, this is a long one! 
Last week the CPI came out not as expected. The percentage doesn't matter as much as the DIRECTION... it went up! This threw the market for a loop. Interest rates did increase and now the headlines are making you believe we are going into depression.
WE ARE STILL IN A STRONG HOUSING MARKET.
The likelihood of massive job loss and massive loss in the stock market is not likely... granted it may feel like it today.
Interest rates increased from 5.5% last Thursday to 6.18% yesterday. As we go into FED week, the market was expecting a 50bp increase. However, with the increase in CPI, the FED may be forced to increase that rate even more. That possibility of change is what makes the market react. The market likes knowing what is going to happen. So when the possibility of change looms, it begins to move.
Bottom line is that rates went up for several reasons, but we remain part of an incredibly strong real estate market.
I want to talk about the interest rates first because they went from 5.5 on Thursday to 6.18% on Monday 5.5% . That is a massive jump. Especially if you are watching my live session. I said, hurry up and get under contract, take advantage of the interest rates that we have today because next week we're going into the fed.
Now, even when interest rates started to go up, a lot of people are asking me how high do you think, they could go? And I was like six and a quarter, right? So we're here. We're at 6.25%. We made it, do we go much higher? I don't know. I don't know because the fed where we're at right now is a little bit unchartered. We've got this quantitative tightening that's happening and how aggressive the fed, uh, goes, is going to push interest rates. But what interest rates are doing right now is squelching demand. It's authentic demand reduction.
Listen to this episode as I also cover the continuing reasons the housing market is so strong. GET IN NOW!

Everybody's starting to look at the fact that more homes are now going are, are reducing their price before sale. I talked about this in the DMAR report that we just did last week in the video talking about the fact that those people that had to do a price reduction were on the market for an average of 28 days. That is a massively long time compared to what we've been feeling and how fast the market has been moving nationally. That number is up to 24% of homes are discounting their price before they sell. Historically, that number is at a third 33%. We are still well below normal.
And when we get to normal, it won't even feel like normal because we've been so fast for so long. Keep everything in perspective. Yes. I know interest rates are high and yes, I know home prices are high, but appreciation will continue because demand is going to continue. Existing homes cannot fill all the gaps in the past. Somebody had sold a home and purchased a home. Now they're holding onto that home and they're converting into a rental. Now they're keeping it in the family and selling it to a family member with a gift of equity. They are maintaining the home or they're aging in place. They're taking that equity. They're pulling some of that equity out and they're converting that home into a rental property and buying the next primary home with the equity that they've pulled out of it. That's what we're seeing a lot of in this market.
We need to see more turnover. Obviously, we're seeing a little more inventory. Fantastic. None of this means that we're going to head into a housing bubble. Interestingly, last week we had several economic indicators. We had the unemployment state flat at 3.6. We had ism manufacturing index came in stronger than expected. Yes, consumer confidence is down, but that's based on the price of everything.
Real estate is the best hedge against inflation. We are not headed towards a housing bust, will the economy slow? I hope so will spend slow. I really hope so. Because consumer spending is 70% of the GDP. I hope all of those things happen. I hope appreciation slows down. Would it shock me if we had a 0% appreciation next year, a little bit, a little bit, but I wouldn't be upset about it because I know that the value of my home is holding and that it is a hedge against inflation, the cost of everything. And that rents
Listen to this episode for the full summary of the impact.

What will housing look like in a recession? A recession will be good for housing. Recessions usually bring lower interest rates which will bring on strong demand. Strong demand on top of birth rates 30-33 years ago and high liquidity brought on by the Fed. Lower interest rates when supply is challenged by "interest rate lock", aging in place, investor buyers, and builder backlog.
Headlines want you to be worried. I want you to jump in. From my seat, the sooner you get in before a recession comes, the more opportunity for equity growth, when demand spikes and home prices rise.
Want to know what you can do? Let's talk!