Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
As winter-break comes to an end for local yeshivas, many are returning from their travels in a very unusual Covid-19 vacation season. Some parents have expressed fury against the schools for maintaining such a long break, necessitating the need for many families to go away. For those that did leave, the timing couldn’t be better as temperatures plummeted to frigid levels. Shout-out to all those backyard minyanim that maintained their davening schedules despite the dropping temperatures. Apparently, no one has told the housing market that it’s winter season, as they continue their record-setting home prices, as if it were the peak of summer.
The Sizzling Real Estate Market
The Case-Schiller Home Price Index, which is considered the “gold standard” for appreciation, showed that nationally there was a 9.5% annual gain in November. This was another monthly increase, up from an already strong reading of 8.4% in October. The 20-city index rose at the quickest pace in six years, increasing 29.1% year-over-year, with all of this City’s showing substantial gains. The FHFA, which conducts a separate home appreciation analysis, showed an even larger year over year increase at 11% for their index.
Zillow’s Hot Housing Predictions
While the previous two reports are backward-looking, we did get some hot forecasts from Zillow this week about the housing market. Top experts from Zillow, the most recognized online real estate platform, predicted that home prices would rise by 10.5% in 2021. They also foresee that prices will peak at 13.5 percent in June. Additionally, they estimate that home sales will sizzle by 21% this year. This is a lot higher than what I think will happen, as I often recall Zillow overshooting their estimates.
Mortgage Volume Not Too Hot
Not everything was boiling in the headlines this week, as we did see cooling in mortgage loan activity. The Mortgage Bankers Association released their Mortgage Application Data for the week ending January 22nd. The report showed that overall application volume decreased by 4.1%. Applications to purchase a home were down 4.0%, and Refinances decreased by 5.0%. Most analysts believe this was due to the recent uptick in mortgage rates. I was surprised to see that volume was reported lower this past week, as we didn’t experience the same at Approved Funding. Our business was up, B” H, and I attribute it to so many people who saw the stories about the cooling rates and wanted to lock in before they lost out. It still is not too late.
The Fed Continues To Fuel The Fire
The Fed minutes came out this week, followed by a live statement and Q&A from Chair Powell. The Fed minutes noted that rates will be left unchanged and that they will continue their $120B monthly bond asset purchases. They remained committed to their “above 2.0%” inflation goal and said that the speed of the recovery depends on the trajectory of the virus and vaccine. They also noted that the pace of the recovery and economy has moderated. That last part was a new addition to previous Fed comments, so it is something to watch closely.
The Stock Market Cools Off
The week also brought a steep sell-off in the stock market. On Wednesday, we saw the Dow drop more than 600 points for its worst day since October. The S&P 500 dropped almost 100 points and turned ‘red’ for the year. The S&P dropped beneath its 25-day moving average, the first time it has done so since early November. All eyes are watching where these markets go from here.
These latest reports showed that the real estate market continues to be red hot, and with inventory levels at an all-time low – with less than a two-month supply of homes on the market – something needs to give. Will things cool off in housing, or will we experience the summer heat in the dead of winter?! While prices have been moving up, purchasing a home is actually getting more affordable thanks to extremely low interest rates and rising incomes. The bottom line is, whether you are shopping for a new home or looking to sell or refinance your current home, it is currently the best season to do so!
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