Mortgage Update – January 2023

As we journey into 2023, I decided to look back at the housing and mortgage predictions from our 2022 January newsletter. These prognosticators were clearly off the mark last year. Much of this was driven by the Federal Reserve’s poor communication. It really wasn’t until the spring that they even admitted that they were behind the eight ball on taming inflation. They then were forced to do an about-face and raise interest rates by 3 ½% over the next six months. The first prediction was that mortgage rates would only go up slightly to the mid-threes by year-end. We topped out in October in the mid-sevens but have recently retreated down into the low to mid 6’s. Second was that home prices would continue to rise a lot. We are still waiting for the final figures but nationally we should end up in the 8 to 10% appreciation range for 2022 (Atlanta was actually higher than that). Realistically we are probably now looking at low single-digit appreciation. They felt that bidding wars would remain in place on existing homes. While that was the case earlier in 2022, the market has clearly shifted to sellers not only providing contingencies for inspections and appraisals but also, in some cases, sales prices reductions and closing cost concessions. Finally, cash out refinances would finally get hot. That clearly did not happen because refinance activity is down 85% from 2021. Yes, 2022 was a very difficult year for the housing and mortgage industries. Builders are cutting back; mortgage lenders have been laying off personnel in droves and home sales have slowed significantly. As we enter this year, we have much better understanding of where the Federal Reserve stands in their battle against inflation as they near the end of their rate hiking cycle. Consider the opportunities for both buyers and sellers in this year’s predictions:

  1. Mortgage rates will move lower this year. – We have already seen rates come down significantly from their peak in October. With inflation continuing to ease, we could see rates approach 5% or even the high 4% range by year-end.
  2. The housing market won’t crash – there is a lot of doom and gloom in the media, but this is not 2008/2009. There are significantly fewer homes on the market than there were back then (75% less). Also consider that the Mortgage Bankers Association maintains their medium run bullish call and housing demand: there are 50 million 28 to 38-year-olds in the US population right now. Household formation should remain robust for years, and many of these young people are at or approaching peak first time homebuying age.
  3. Home prices will be mostly flat in 2023 – many areas have already experienced a flattening of prices this past fall but with interest rates likely to fall, activity in the spring should pick up nicely. This bodes well for both buyers and sellers.
  4. The spring homebuying market will actually be decent – no, it’s not going to be riddled with bidding wars. Nor will total home sales be as high as they were in 2022 but conventional thinking is that a combination of lower asking prices and improved interest rates will bolster the market.

50 Questions to Ask Your Kids Instead of Asking “How Was Your Day”

We found this on a site called Her View From Home. Below are our favorites. Try asking your kids these four questions every night and it will change your relationship. It will bring you closer. It will create a more positive shift in their focus throughout their day and in yours.

What was your favorite part about your day? – This question allows us to jump through the coup of positivity together. It helps your children focus on the best parts of the day, and gives us another opportunity to reflect on them, laugh even more about them, and find joy in the special moments one more time before they close their eyes.

What was the least favorite part about your day? – This question allows us to jump through the hoop of reality together. No one is perfect. Everyone makes mistakes, so it’s great to have the opportunity to be real and talk about these things in their day that didn’t go so well…… Bad choices, disrespect, being irresponsible. This question allows you to model unconditional love and has given you many second-chance teachable moments. Even if I lost my temper the first time around, I have one more chance to walk them through what they should have done differently. It’s great for kids to be reminded that tomorrow is a new day to try again.

Do you have any questions about your day? – This question allows us to jump through the honesty group together. It establishes a habit of always letting them know that they can ask me anything and can trust me to listen and love. It shows them that I am a “safe” person who isn’t going to charge or get angry or be upset if they want to talk about tough stuff.

How did you show kindness or love today? – This question allows us to jump through the integrity group together. It encourages them to be kind and loving to others even when no one is watching. It is the most powerful, life-changing question I have asked! The writer said that her kids have learned just how simple it is. When she first started asking this question, her eight-year-old had trouble coming up with an answer, so she would step in and tell what she saw him do… He was thoughtful to take his plate to the sink, he played with his sister nicely, etc.… Creating an awareness of the little ways that he can show kindness and love is empowering them to do even more. Plus, she finds herself looking for those positive things each child does throughout the day so she can share with them at night.

If you would like a copy of the other 50 questions, shoot an email to johnbecker@leader1.com and we would be happy to forward them on!!

Certified Divorce Lending Professional (CDLP)

Congratulations to our own John Becker, completing a demanding educational curriculum to earn his CDLP designation!! This will allow John to better assist clients who have recently gone through or are currently going through a divorce. Not only is selecting a divorce financial advisor one of the most important decision ones makes during a divorce; but equally important is the extended professional divorce team of these trusted advisors. When real estate is involved, divorcing couples are looking for professionals who not only empathize with what they are going through but who also understand the tax and legal implications of dividing real estate in a divorce. Please keep John in mind should you know anyone who is unfortunately experiencing this life event.

Interest Rate Update

Back in late October long-term interest rates peaked in the mid-7’s. It happened very quickly in response to investors speculating that the Federal Reserve had lost control of their battle against inflation. Fortunately, the next month inflation started to slowly fizzle. Including the January reading that just came out, we have had three straight months of significant declines in inflation. Rents are declining, wage growth is slowing, and many other goods & services are starting to moderate. Because of this, the Federal Reserve is beginning to slow their pace of interest rate hikes which they are telegraphing should stop by the spring. Remember that long-term interest rates are not tied to what the Federal Reserve is doing with their shorter-term rates, rather based on investors perception of inflationary pressures and the trajectory of the economy. Most believe we are either in a recession or will be in one soon and that coupled with the recent decline in inflation readings, has sent longer-term interest rates lower. We are now in the low to mid 6% range depending on whether you pay points which is significantly lower than where we were in October. Assuming that inflation continues its downward trajectory, which most assume it will be based on the Federal Reserve’s aggressive posture, many speculate rates will be down closer to 5% in the first half of this year. This will provide a unique opportunity to make a move this spring as sellers have become more conciliatory. If you would like to explore purchasing a home, now is the best time to position yourself for success. Give us a call @ 678-483-3300 to learn more about our unique offerings!

Product of the Month

We are pleased to announce that we have a new loan program specifically for first-time homebuyers that provides a $5,250 credit towards either the down payment and/or closing costs. It is a pilot-release limited to 6 metropolitan areas nationwide and any first-time homebuyer who currently lives in a designated census tract is eligible. There are a total of 17 counties in the Atlanta metropolitan statistical area with designated census tracts so if you know anyone in the process of looking for their first home, or considering buying one this year, tell them to call us and we can check if they are eligible for the $5,250 credit!