November 9, 2021 – Triple Witching Hour. Just two weeks ago, we spoke about the “trifecta” of economic events spanning the end of October and early November.

Economic Commentary

So How Did We Do? Just two weeks ago, we spoke about the “trifecta” of economic events spanning the end of October and early November. Or perhaps we should have labeled it the “triple witching hour” since that time period also encompassed Halloween. Let’s now pull out our scorecards and see how we did over this period. 

First, we had the release of the data on economic growth for the third quarter. Even though this number will be revised twice, it is very important because of the release right before the Federal Reserve met and considered tapering their purchases of bonds and mortgages.  The preliminary estimated growth rate of 2.0% was seen as a surprise on the downside, as it was a sharper slowdown than expected. Just a few days later the Fed met and announced that they were beginning their tapering of mortgage and bond purchases. Was the Fed influenced by this number? Their statement indicating that they would continue to be patient regarding when they will raise their benchmark overnight interest rate might have been evidence of this concern. 

Finally, on Friday we had the employment report for October. This release was too late to influence the Fed, but certainly was very important after two previous mixed, but generally disappointing, reports. The gain of 531,000 jobs and unemployment rate of 4.6% was seen as major positives. In addition, the previous two months of data was revised upward by 235,000 jobs, making the report even stronger.  In all, a lot of data for the markets to react to. Generally, we saw a lot of volatility in the stock and bond markets during the past few weeks – with stocks hitting record levels more recently.  Will the markets calm down now? Only time will tell.

Weekly Interest Rate Overview

The Markets. Mortgage rates fell back a bit in the past week. For the week ending November 4, 30-year rates fell to 3.09%% from 3.14% the week before.  In addition, 15-year loans eased to 2.35% and the average for five-year ARMs decreased to 2.54%. A year ago, 30-year fixed rates averaged 2.78%, more than .25% lower than today. Attributed to Sam Khater, Chief Economist, Freddie Mac – “While mortgage rates fell after several weeks on the rise, we expect future upticks due to stronger economic data and as the Federal Reserve pulls back on its stimulus. That said, the housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

A new analysis by Zillow, measuring the age, sex, race, and income of homebuyers over the course of a decade, reveals that millennials and baby boomers—two of the biggest generations in U.S. history—are in the market for homes in a big way. The study found that young people are making up a smaller share of recent homebuyers than in previous years, further indicating there is still much pent-up demand from millennial households. However, Americans 60 years and older were more active in the housing market than a decade ago. With an aging population, assisted by an improving economy, individuals of every age group over 30 were buyers at higher rates in 2019, than those same age groups in 2009. “Even before the pandemic, the largest-ever generation entering their 30s, and the hangover from more than a decade of underbuilding were on a collision course set to define the U.S. housing market,” said Jeff Tucker, Senior Economist at Zillow. Even as millennials are the biggest players in the U.S. housing market, buyers are trending older. The median age of a recent buyer—somebody who bought a home in the past year—was 44 in 2019, up from the age of 40 in 2009. That’s largely because baby boomers, who make up a big share of the population, were also more active in the housing market than those their age just 10 years prior. “There are many hurdles millennials must overcome when buying homes of their own, one of them being fierce competition from the next-most-populous generation: baby boomers,” Tucker said. “Whether downsizing or moving to a new town, baby boomers being more active means competition that previous generations did not have when buying their first home. And older buyers have the advantage of a lifetime’s worth of savings and home equity to leverage in a competitive offer.” Source: DS News

About three in four recent home buyers say they factored in natural disasters when choosing a location for their new home, according to a new survey of about 3,000 consumers conducted by realtor.com®. Seventy-five percent of recent home buyers say they are concerned about the threat of natural disasters. The natural disasters that have them most concerned: tornadoes (39%); severe cold or winter storms (38%); floods (35%); hurricanes (29%); earthquakes (21%); wildfires (17%); droughts (11%); and sinkholes (8%). Further, one-third of survey respondents say they’d even consider selling their current home and moving to avoid natural disasters. Homeowners located in rural and suburban areas are the most concerned about tornadoes and severe cold or winter storms. Meanwhile, flooding was a top concern for homeowners living in urban areas, the survey shows. “Natural disasters can have enormous impacts on communities and homeowners, and with increased frequency and intensity of weather-related events, and this survey is a good reminder of how important it is to be prepared,” says Mickey Neuberger, realtor.com®’s chief marketing officer. Source: realtor.com®

A report from American Advisors Group (AAG) has found that senior homeowners overwhelmingly want to remain in their homes for as long as possible as they age as it is the place feel safest amid the pandemic. According to the survey, 92% of seniors plan to live out their golden years in the safety of their own home while only 8% want to move into some sort of assisted-living facility. This includes 82% who said they do not plan to ever move, no matter the circumstances. Seniors are now also viewing their house as more than a place they live—but instead as their most valuable asset—as 73% of seniors now say it is worth more in the current market than all of their other investments combined. The COVID-19 pandemic only strengthened seniors thoughts about living at home for the rest of their lives. In fact, 50% more seniors agreed with this sentiment and felt safer at home after the events of the 18 months than they did before the pandemic. The report also found that 55% of seniors have paid off the mortgage on their homes and are now living debt-free in that aspect while 40% of those who have not paid off their mortgages are exploring reverse mortgages in order to leverage their equity against the remaining monthly payments on their home. Stated AAG Chief Marketing Officer Martin Lenoir — “Our data shows that older Americans are well aware of what their homes are worth and are looking to utilize the equity they have gained, which is a big reason why we’re seeing so many seniors interested in reverse mortgages. Homes not only embody the journey that seniors have lived, they also represent a possible retirement strategy for the future.” Source: MReport