Mortgage Market Update - Home Prices Hitting New Highs & What Important Recession Indicators Are Saying - 11/13/23

Hey everyone, it's Larry Bailey from Mortgage Workflow Partners. This is for the Week of November 6, 2023, in Review:

• Home Prices Continue to Hit New Highs
• Continuing Jobless Claims Increase for Seventh Straight Week
• What Important Recession Indicators Are Saying

00:00 Introduction
01:21 Last Week's Information
03:22 CoreLogic's Home Price Index
05:08 Continuing Jobless Claims Increase
07:50 Important Recession Indicators

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Transcript

0:00

Hey gang, Larry Bailey here with Mortgage Workflow Partners bringing you another weekly update This is for the week of November 6th, 2023 in review. Today is Tuesday November 14th and I wanted to wait till today because we were waiting for some information coming out that just hit this morning and basically inflation month over month did not change. And if you could see this number up here, I'm getting goose pumps because 51 basis points to the better in one day is enormous and the fact that it's in the correct direction is even better. So, this information is brought to you from MBS Highway, your trusted source for mortgage market intelligence. It's also brought to you from Mortgage Workflow Partners. And stay tuned. I'm going to be bringing some awesome news. To help a lot of borrowers directly. More to come on that soon. Let's get into these stories again. This newsletter was from yesterday, November 13th. And I wanted to wait till today because I wanted to see what was going to happen with the market so we could talk about it. Remember, this information is prepared over the weekend. And so we're going to go over last week's information. Here it is. So the the more reports show that home prices are setting records while continuing unemployment claims hit a seven month high. Plus what you need to know about some key recession indicators. Here are last week's headlines. First story is home prices continue to hit new highs. The next story is continuing jobless claims increase for a seventh straight week. The next story is what important recession in leaders are saying. And again, I want to kind of kind of come back to this whole thing when it comes to mortgage interest rates. The suckiest part is when we look like we're going into recession, mortgage interest rates get better. Go do that math. Like that's the sucky part of interest rates. When times are flying high, inflation is up, interest rates go up. It's the way things are apparently. So if you're listening to this on podcast or replay somewhere, thank you very much sincerely. Head over to mortgage.community. It's a free account. You can watch the videos. I do screen share, get all this information if you'd like to see what's going on. Because there are screenshots that are shared. And sometimes I do screen shares even for information off the newsletter. Hasn't happened often and or recently, but it has happened. And it probably will happen at some point in the future. We'll go over things like rates and how things work in the mortgage industry. That's really what the mortgage community is all about. This weekly newsletter is, is helpful to give you a some past summary of what's been happening. But really what I want this to be is learning and then making better decisions, making better choices and becoming more educated. That's what this community is all about. So here's the first story. Home prices continue to hit new highs. So on image, we see an image of home prices turning higher and it basically ranks out the Case Shiller, the FHFA, which is the Federal Housing Finance Agency. CoreLogic, Black Knight, and Zillow. These are the five that we typically refer to. And if you see, if you see on the screen, there's white and yellow, so the yellow ones indicate something that are all-time high readings. So here's the story. CoreLogic's Home Price Index showed that home prices nationwide rose 0.3% from August to September. Hitting a new all-time high for the fifth straight month, CoreLogic forecasts at home prices will rise another 0.1% in October and then 2.6% in the year going forward, though their forecasts tend to be on the conservative side historically. In fact, CoreLogic's index is on pace for an 8% appreciation in 2023, based on the monthly readings we've seen so far. Black Knight also reported that National Home Vectors were able to pay for the monthly readings values rose 0.4% in September, with their index also showing new all-time highs in home values for the 5th month in a row. Home prices are now almost 3% above their 2022. Peak in Black Knight's Index which is on pace for 7% appreciation this year based on the monthly gains we've seen to date. So what's the bottom line? The latest rise in home prices reported by CoreLogic. And Black Knight, pardon me, echoes the strong growth seen in other major indices like Kay Schiller, Zillow, Federal Housing Finance Agency, FHFA. These reports continue to demonstrate why homeownership remains a good opportunity for building wealth through real estate. I'm telling you what I see. What I see is nobody saw this coming two years ago. Two years ago, if you can remember. Everybody's like, hey, things are going to get worse. We're going to hit this peak, this bubble. Yeah. And by the way, this thing keeps trucking up. We're now at 62 basis points. Just this quick record. Should be interesting. Should be interesting to see what mortgage rates do. Mortgage rates were like at 8%. Two weeks ago, they were bubbling across that. I just did some interest rate searches yesterday for some folks. And they were almost in the fives with no points. So wild, wild changes, wild swings, timings, everything. So listen, here's the next story. Continuing jobless claims increase. For seventh straight week. Initial jobless claims declined by 3000 in the latest week with 217,000 people filing for unemployment benefits for the first time. The real story remains continuing claims which increase by 22. We'll see you in the next one. 2,000 showing that 1.834 million people are still receiving benefits after filing their initial claim. The last time continuing claims were this high was all the way back in April of this year. So the bottom line here is that. Initial jobless claims remain relatively low on a historical basis, suggesting that employers are trying to hold on to workers. However, continuing claims have risen for seven straight weeks up by 176,000 in the time frame, suggesting that it's becoming harder for people to find employment once or let go. And this sentiment was echoed by ZipRecruiter last week during their third quarter earnings call. Co-founder and CEO Ian Siegel explained that the feds Red Red Red Red Red Red Red Red Red Red Red Red Red Red Red Red rapid pace of rate hikes has increased borrowing costs for businesses leading to a quote, a much more cautious approach to hiring close quote. He added that there or lower job openings unless hiring is a result quote, job seekers are taking longer to find work and those currently employed are changing jobs less frequently close quote. In fact, he noted that the quit rate has returned to pre pandemic levels. I will say on this as a business owner, I see this all day long and I'm making these choices too. Like, I'm not hiring. I'm looking at cutting unnecessary expenses. I'm looking at what people are doing and making sure that they are most efficient. I spoke with another business owner yesterday who runs a very large loan operating system in the mortgage space and they are hiring Hiring freeze. So this sentiment of folks not being able to be hired in the mortgage industry right now, it's palpable. And then, you know, outside the mortgage industry, obviously that's what the numbers are Thank you for watching! So, this next story is what important recession indicators are saying. So, the latest job jobs report from the Bureau of Labor Statistics, the BLS, showed that the unemployment rate reached 3.9% in October compared to the low of 3.9%. 1.4% it reached in April while the economy was expanding. This level of increase has been a reliable leading indicator of a recession historically. From 1970 onwards, when the unemployment rate has risen by 0.5% or more from the expansion low, a recession was either already occurring or recurred within two months. Another recession indicator called the Somer rule named after Thank you for watching. Thanks for watching! Former Fed economist Claudia Somm flashes when the three moving average, that doesn't mean any sense here, but flashes in the three month, sorry, three month moving average of the unemployment rate rises by 0.5% or more relative to its low during the previous 12 months. So in this case, if the unemployment rate in November rises to 4.2%. Percent. And this data will be reported on December 8th, this indicator would be a trigger. The third labor market recession indicator occurs when the number of people unemployed for 15 weeks or longer, as measured by the BLS jobs report, Thank you for watching. Rises by 19% or more on a year of year basis. And guess what? We just crossed that threshold in this last report, which was released some of them for third. So the bottom line here gang is while a recession is not a great thing for the economy, one positive aspect is that periods of recession are always coupled with lower interest rates. And that's what I just shared with you earlier. It sucks. It really, really sucks. And you got a hustle. And I know people that are working multiple jobs and they're making ends meet. See ya! And it's not easy. And yeah. And it's it's always great when money's flowing real fast and when things get tough it sucks. I know this. I've been in banking since 93. Be more expensive. Banking since 87. And every day you gotta go find that next penny. And I'm with you. So good thoughts, luck, et cetera. Thanks for watching! energies to those that are out there looking for employment, please keep hustling. Don't stop. Don't stop. So, here's the family hack of the week. This banana nut bread from the Food Network. It's easy to make and perfect to snack on at any time of the day. So, how to make this thing. You preheat the oven to 350 degrees Fahrenheit. You're going to say nine by five by three inch loaf pan. It's just nine by five loaf. I don't know why I do that. They're all, anyway. So, make sure it's tall so you can get a loaf as the point. So, in a medium bowl, sift one and one quarter cups of all-purpose flour, one teaspoon baking soda, one half teaspoon salt, and set that aside. Then, separately you'll whisk two large eggs and one half teaspoon vanilla together in a liquid measuring cup with a spout and set aside. I don't know if you need a spout or not, but I don't know any measuring cups that don't have spouts. Thanks for watching! I guess maybe if you had it like an old one. So using a stand or hand held mixture, cream together, half cup unsalted butter. That was room temperature. That way it creams up really nice. And add one cup sugar until late and fluffy. Gradually pour in the egg mixture that you made into that butter back butter mixture and mix until incorporated meaning together. Mashing three right bananas or the fork and add that to butter to the batter. Excuse me. Remove the bowl from the stand mixture if that's what you used. Anyway, We'll see you in the next video. Stir in the flour mixture until just incorporated meaning don't over stir it. Just make sure it's there. Stir in a half cup toasted walnut pieces. Add that batter to the prepared baking tin, the loaf pan thing and bake that for 55 minutes. Or until a toothpick inserted in the center comes out clean presuming it's a wooden toothpick. Allow that bread to cool in a pan or wire rack. Make sure you get plenty of air around that sucker for five minutes and then turn around. Cut it over and it and it should probably fall out of there and make sure everything's cool and complete. I know it was good because when you cut into that sucker it's not too moist. It's just the right. So good luck with that. That sounds really good. We make banana bread quite a bit in our house. So I found one. Here's what to look for this week. So crucial inflation reports are ahead with October's consumer price index. Being released today. That's Tuesday. And that's what's happening gang. This thing right here, this consumer price index. That's what happened. And that's why we're at 67 basis points higher. Hopefully the rally continues. We'll see. So and then the producer price index which is the wholesale that's released tomorrow and if that comes out, this rally is going to continue. If that actually doesn't pop up high or is not as high as expectations. You'll see this rally continue which will bring down mortgage interest rates. So, the housing data will also make headlines starting Thursday with an update on home builder sentiment from this month from the National Association of Home Builders. That's the NEHP. Thank you. October's housing starts and building permits will be reported on Friday. We're also going to look for November's manufacturing data from New York and Philadelphia regions on Wednesday and Thursday respectively. And then around out the week we've got October retail sales on Wednesday and the latest jobs. Claims on Thursday. Huge week for numbers. And again, if you're looking on screen here, if you come over and if you go to mbspardonnyhighway.com and you go to the market overview. You'll see that here. I mean, this is what we're looking at, right? So again, if you're seeing this on screen, which I hope you are, all those little padlock guys are what Barry had been in his team. I recommend locking. We saw this. Last year over on November 9th and then on the 10th and then we've seen kind of this rally go on here and what we're looking for of course is improvement in these lines. This is good. This goes back. I think this is just last quarter but years. You can kind of see the grace that we fell from back in November 15th, 21. You know, the price of this money was There's 100.$12.24 per hundred. So it was a premium of $12.24 for a dollar bond. It's basically how you're looking here. Right now that price at Bess is 101, right? 1.11. So I got 11 more, 11 more percent technically to go. 11 more bait, 11 1,100 and 11 basis points to go. That's it. It's just a thousand. Anyway my name's Larry Bailey, mortgage work where I'm at work, mortgage workflow partners. You can find out everything you need to know about me over at mortgageworkflowpartners.com over on LinkedIn, somewhere on the internet. Just look up Larry Bailey, New Jersey, mortgage. You'll find me. Everybody have a great day and be well. Talk to you later. Bye bye.