Author: Preferred Customer

Volume 18 Issue 6 June 2024

This Newsletter
Is brought to you by:

John Doe
Senior Loan Officer
Ajax Mortgage
111 Mortgage Way
Mortgagetown, MD, 11111
(301) 555-1212
(800) 555-5555
Ajaxmrtg.com

Specializing in
Residential Purchases
Residential Refinances
Commercial Properties
Home Equity Loans

Is Two Months a Trend?

The Federal Reserve’s Open Market Committee (FOMC) meets again in June. Some months ago, market analysts were 50/50 on a bet regarding a decrease in short-term rates at the Fed’s June meeting. Then came some very strong jobs reports and also some stronger-than-expected inflation news, causing the odds to drop below 25%. There have been plenty of statements by Fed members cautioning that rates will have to stay higher for longer:
Fed Chair Jerome Powell reiterated May 14 that inflation is falling more slowly than expected, likely keeping interest rates elevated for an extended period…CNBC
That statement was made one day before the April Consumer Price Index was released. That data showed some improvement in the inflation picture, though the improvement was minimal. The Fed’s favorite inflation index (Personal Consumption Expenditures Index or PCE) will be released shortly. Thus, we had a more moderate jobs report in early May. This was followed by a slight improvement in the inflation trend on the retail side.
What if the economy added a small or even a moderate amount of jobs in May when the employment report is released in early June? Would that be enough for the Fed to reverse course? We doubt that would be the case. However, it might be enough for the Fed to soften their “higher for longer” language. If this happens, then the end of July meeting of the FOMC could put a rate decrease in play – if we continue to get some good inflation news.
The next Consumer Price Index is to be released on the second day of their meeting. Therefore, the period starting with the June jobs report to the days of the meeting should be very interesting....q

Continued on Page 3

Did You Know…
According to Redfin, the median home sale price in the U.S. increased 6.2% year-over-year in April to $433,558, representing the highest level on record.
New listings rose 1.7% month-over-month in April on a seasonally adjusted basis, and 10.8% year-over-year. Nonetheless, they were around 20% lower than pre-epidemic levels…

Selected Interest Rates
May 23, 2024
30 Year Mortgages———6.94%
2023 High (Oct 19)—–—–—7.79%
2023 Low (Jan 26)———6.09%
15 Year Mortgages———6.24%
10 Year Treasuries—–—–4.45%
Sources—Fed Reserve, Freddie Mac
Note: Average rates do not include
fees and points. Information is
provided for indicating trends only
and should not be used for
comparison purposes.

In This Issue

P2 Home Sales To Rise || P2 What Millennials Want in a Home
P3 Is Two Months a Trend? || P4 Don’t Need Twenty Percent
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Home Sales
To Rise

Given the long-term growth of the U.S. population, there’s no way home sales can remain historically low for much longer, National Association of REALTORS® Chief Economist Lawrence Yun said recently during their legislative meetings in D.C.
Yun pointed out that there are 70 million more Americans today than in 1995. Housing needs are only increasing, and that won’t change because of complicated economic factors, he said. Although home sales are at a 30-year low as buyers face higher borrowing costs and stubbornly low inventory, housing options on the market are beginning to increase. To get markets moving, he said, NAR has been advocating for a variety of measures in Congress, such as giving investors an incentive to sell to first-time buyers and increasing the capital gains exemption on the sale of a primary residence.
And while the Federal Reserve has delayed rate cuts that were expected to start this spring, Yun said he anticipates as many as six to eight rate cuts by the end of 2025, possibly beginning as early as September. “If the Fed were to normalize its policy, then maybe mortgage rates could move lower. So, not only are we getting potentially more inventory, but we’ll also get more buyers as rates comes down,” he added....q
Source: NAR

What Millennials Want...

For most Americans, homeownership remains an integral part of an otherwise shifting interpretation of the American Dream. Nearly 90 percent of Millennials – a group known for their tendency to rent in the city the longest – plan to purchase their own place at some point. The key difference between Millennials and prior generations is that young people view homeownership as a personal lifestyle choice rather than a definite milestone. As such, young home buyers are somewhat particular when it comes to their dream home must-haves.
Per a survey conducted by Trulia and Harris Poll, 72 percent of renters ages 18 to 34 plan to buy a home in the future. In preparation of this new wave of home buyers, consider where young people want to live and the home features they desire most.
Tiny Homes: Still a Niche Market
While a sustainable and efficient household lifestyle is gaining in popularity, most buyers don’t see a tiny house as the ideal option. Forty-four percent of all buyers (regardless of age) prefer a home between 1,401 and 2,600 square feet – a size that holds two to four bedrooms, depending on property type. One-third of Millennials aren’t sure of how big they want their dream home to be, but 20 percent say 2,001 and 2,600 square feet is ideal. That’s much larger than the typical tiny home, which ranges between 400 and 1,000 square feet, on average.
Modern Beats Traditional
Baby Boomers traditionally favor single-story homes, but both Gen X and Millennial home buyers prefer a more modern aesthetic and layout. Anecdotal evidence also suggests that young people wish for move-in ready interiors instead of do-it-yourself (DIY) updates and large remodeling projects. Hardwood floors, granite countertops, stainless steel appliances and layout efficiency regularly make a lasting impression on young house hunters. Aside from modern architecture styles, Millennials also like Victorian or Craftsman homes. And, despite their city-driven lifestyles, just 6 percent of Millennials see themselves purchasing a high-rise penthouse apartment.
Headed to the Suburbs
Most Americans would rather live in the countryside (27 percent) or suburbs (27 percent) over a major metropolitan city (8 percent). For Millennials, though, exact location isn’t as important. Young people prioritize a shorter work commute and top-notch school districts first, putting less emphasis on any specific address. However, when it comes to traffic, living near the urban core often minimizes work travel time.
Kitchens and Open Concept
Millennials’ biggest dream home feature is having a balcony with a view (60 percent) and terraces are far more prevalent in multi-family buildings near the urban core. Other must-haves among Millennials include a backyard deck (59 percent), gourmet kitchen (53 percent), swimming pool (52 percent) and open floor plan (45 percent). Across generations, home buyers crave gourmet kitchens and open concepts most often.
While house hunting preferences differ across generations, Millennials’ must-have lists aren’t always practical. Using a home affordability calculator helps young buyers understand what they can afford, despite their predispositions, and keeps expectations in line with the budget. From there, mortgage preapproval and an open mind go a long way in creating a smoother and more successful first-time home buying experience.
Source: Trulia

“…young people view
homeownership as a personal
lifestyle choice rather than a definite milestone…”

Page Two

…In A Home
Continue from Page 2

Is Two Months
a Trend?
Continued from Page 1

“...Then came some very strong jobs
reports and also some stronger-than-expected inflation news...”

©2024, All rights reserved
The Hershman Group www.originationpro.com
1-800/581-5678

Page Three

My goal is to
provide expert
advice and
direction for my clients with an overall goal of providing a real estate finance transaction that exceeds their
goals and
expectations.
— John Doe
Senior Loan
Officer

Don’t Need Twenty Percent

For many households, trying to get a higher down payment can be challenging, said Danielle Hale, chief economist at Realtor.com. Having enough savings for a down payment is a big hurdle for most buyers. Close to 40% of Americans who don’t own a house point to a lack of savings for a down payment as a reason, according to a 2023 CNBC Your Money Survey conducted by SurveyMonkey.
But the reality is, you don’t need 20%, experts say. “Not only is it possible to buy a home with less than 20% down, but this data show that a majority of buyers are in fact doing so,” Hale said. “It’s definitely not required.” Some loans and programs are available to help interest buyers purchase homes through lower down payments. For example, the Department of Veterans Affairs offers VA loan programs that enable those who qualify to put down as little as 0%. Loans from the U.S. Department of Agriculture, referred to as USDA loans, are geared toward helping buyers purchase homes in more rural areas, and they also offer 0% down payment options.
Federal Housing Administration loans, which can require as little as 3.5% down for qualifying borrowers, are available to first-time buyers, low- and moderate-income buyers, as well as buyers from minority groups. Those are “designed to help close homeownership gaps among those targeted populations,” Hale said. Even with a conventional loan, buyers’ required down payment could be between 3% and 5%, depending on their credit score and other factors. “There are options,” Hale said...q
Source: CNBC
Source: Fast Company

In This Issue:
Is Two Months
a Trend?

Joe Customer
Joe’s Appliance Center
111 Center Way Drive
Suite 1005
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Address Correction Requested

John Doe
Senior Loan Officer
Ajax Mortgage
111 Mortgage Way
Mortgagetown, MD, 11111
(301) 555-1212
(800) 555-5555
Ajaxmrtg.com