March 20th, 2023 11:41 AM by Richard Sardella MLO.100007700/NMLS 233568
Cities were a family earning 100K goes furthest:
Homeownership has become more difficult for folks who earn below $100k due to elevated mortgage rates and high home prices, and two years of real negative wage growth (inflation running higher than wage growth) forcing many buyers to stay on the sidelines this spring season.
For those with economic mobility and remote work capabilities, a new report via the fintech website SmartAsset shows the top cities where a $100k household income no longer means living from paycheck to paycheck.
SmartAsset analyzed the after-tax income of 76 major cities and then adjusted those figures for the cost of living in each place. What they found is $100k might go the furthest in Memphis.
Here are a few key findings from the report:
$100K goes furthest in Memphis. The city may be known as the “Home of the Blues,” but Memphis’ low cost of living surely won’t make you sing them. A $100,000 salary is worth more here ($86,444) than in any other city in the study after subtracting taxes and adjusting for the cost of living.
Texas cities dominate the top 10. Thanks to no state income tax and the low cost of living, the Lone Star State looms large in our study. Seven out of the 10 cities in our top 10 are located in Texas. After deducting taxes and adjusting for the cost of living, a $100,000 salary on average is worth $77,885 across the 10 Texas cities that we analyzed in the study.
Oklahoma City has the lowest cost of living. A $100,000 goes a long way in the Sooner State’s largest city, considering that the cost of living is only 83.2% of the national average – the lowest out of all 76 cities in the study. A $100,000 salary is worth $84,498 in Oklahoma City after adjusting for the cost of living.
In New York City, $100K amounts to just $35,791 when you consider taxes and the cost of living. Taxes and cost of living take a big bite out of a $100,000 income in the Big Apple, which ranked last in the analysis. After adjusting for those factors, $100,000 is worth just $35,791.
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 moving sideways today. The MBS market improved by +64 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Bank Run, 2) The Fed and 3) Central Banks.
1) Bank Run: The run on the banking system has been a huge factor in rates over the past two weeks. This week we start off with the news that Credit Suisse will be bought by UBS and supported by financing via the SNB. But will this be enough to stabilize the banking system in Europe? And don't forget we have our own issues in the U.S. with continued fallout from SVB, Signature, First Republic and more.
2) The Fed: We will get our Federal Reserve's latest interest rate decision and policy statement on Wednesday. The bond market is effectively split between the FOMC electing to pause (no rate hike) due to the recent bank mini-crisis or raise 25BPS and signal that they will remain at that level for some time. The answer to the second part of that will come in the form of the FOMC Economic Projections which the bond market will look at for forward guidance on the pace of future hikes and they "terminal" rate which is the max rate before the Fed pivots towards lowering rates in the future.
3) Central Banks: We get key interest rate decisions out of the Bank of England and The Swiss National Bank.
Treasury Sales: We have an important 20 year Bond auction on Tuesday.
This Week's Potential Volatility: High
This morning markets are mostly treading water. Volatility has started a little high but will explode later this week on FOMC.
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.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
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.