CHM Blog

Realtor Market Insider July 8, 2019

July 8th, 2019 11:16 AM by Richard Sardella MLO.100007700/NMLS 233568

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility



(by Sigma Research)
Realtor Report

Rentals surge as housing tries to catch up

According to real estate analytics firm RealPage, demand for rental apartments reached a five-year high this spring, spurred by new household formation and home sales not being able to keep up. The demand is also pushing rental prices up, which may eventually make renters decide to become homebuyers.

"The number of new apartment move-ins in the second quarter of 2019 increased 11% over the same period last year," says the report. "The demand surge drove the national occupancy rate to 95.8%, compared with 95.4% at the end of the second quarter of 2018."

The increase was attributed to economic uncertainty in the second quarter that had already slowed the market in the first quarter. RealPage's chief economist characterized this phenomenon as playing "catch-up."

Chicago and Houston saw the highest demand in rentals, with move-ins in those markets outpacing apartment construction by nearly 3 to 1, according to the report. With demand comes higher prices, with rentals shooting up 3% from the second quarter of 2018 to the same period this year and many small metros seeing bigger increases. Rents rose 7.4% in Wilmington, N.C., and 6.4% in Huntsville, Ala., according to the report.

While much of that new supply is targeting higher-income earners, the market for lower-cost rentals is much tighter. The asking price for homes continues to increase, while the cost of procuring a mortgage is at one of its lowest points ever, with income growth being the key in turning the tide as well as more abundant housing opportunities.

Last week, the Trump administration announced it would explore using federal programs to reduce local barriers to housing construction, such as restrictive zoning.

Source: Realtor, RealPage, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +8bps.  This caused rates to move sideways on moderate volatility for the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week: 1) The Fed, 2) Domestic and 3) Geopolitical

1) The Fed: We have a big week for Fed-speak. We will hear from Fed Chair Powell on three different days with the focus on Wednesday's testimony in front of the House Financial Services Committee. Here is a complete schedule:

  • 07/09 Bullard, Bostic, Quarles and Powell
  • 07/10 Powell - House Testimony, Minutes from the last FOMC Meeting
  • 07/11 Powell - Senate Testimony, Williams, Bostic, Barkin, and Kashkari
  • 07/12 Evans

2) Domestic Flavor: We have some important domestic economic events that have the gravitas to move rates this week with the spotlight on Thursday's CPI.

3) Geopolitical: We will go ahead and lump in Trade War into this category as well. Any real news on movement with China/U.S. will get plenty of attention but we also have auto tariffs with Europe (Germany) and tariffs with Vietnam that garnering attention. Iran/Syria are on the radar, and so is the implosion of one of the largest banks (Deutsche Bank). Also, the European Finance Ministers will meet.

Treasury Auctions this Week:

  • 07/09 3 year note
  • 07/10 10 year note
  • 07/11 30 year bond

This Week's Potential Volatility: Average

There are several moving parts this week that rate markets will have to pay attention to. Look for volatility to spike if Powel's testimony deviates from the expectations of a rate cut. If he appears to signify to the markets that he thinks the economy is strong and doesn't need the rate cut, then we could see volatility spike and rates tick higher.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on July 8th, 2019 11:16 AM


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