Election cycles can shake up the housing market, creating a mix of uncertainty and opportunity for homebuyers. With the recent election behind us, many are wondering how the changes might influence interest rates, incentives, and market stability.

As a first-time homebuyer, it’s essential to stay informed and navigate these shifts strategically. Don’t worry—with a little preparation and smart decision-making, you can avoid common pitfalls and make confident choices.

Budget Wisely

Higher interest rates mean higher monthly mortgage payments. This isn’t the time to overextend yourself. Take a close look at your finances, including all your expenses and savings goals, and determine a budget you’re comfortable with. Be conservative—it’s better to have some breathing room than to feel stretched thin. Remember, your budget should include more than just your mortgage payment. Think about property taxes, insurance, maintenance costs, and even utility bills. Planning for the full picture now will save you stress down the road.

Think About Long-Term Stability

The housing market may feel like a rollercoaster, but you don’t have to ride every twist and turn. If you’re planning to stay in your home for several years, short-term price fluctuations won’t matter as much. Instead, focus on finding a home that meets your needs and will continue to fit your lifestyle in the future. A long-term mindset can help you view your home as an investment that grows in value over time—even if the market feels unpredictable today.

Stay Alert for Incentives

Why Home Sales Tend to Bounce Back Post-Election

Here’s an interesting trend: real estate markets often see renewed energy after an election. Why? It’s all about certainty. Elections bring clarity about the direction of policies, which can help both buyers and sellers feel more confident about moving forward with their plans.

While the weeks leading up to an election often bring a slowdown due to uncertainty, the post-election period tends to spark a rebound. Buyers who were hesitant may reenter the market, and sellers often feel more secure about listing their homes. This increased activity can bring opportunities for you as a buyer. With a solid plan in place, you’ll be ready to seize the moment and make the most of favorable market conditions.

Strategic Planning for Success

Yes, short-term volatility is part of the process, but it doesn’t have to hold you back. With careful planning and a clear understanding of your goals, you can turn challenges into opportunities. Remember, timing the market perfectly isn’t the key—making informed, confident decisions is.

Whether you’re just starting your home search or waiting for the right moment to jump in, staying educated and prepared will set you up for success. Keep your eye on the long game, lean on trusted advisors, and keep looking for those opportunities—they’re out there, even in uncertain times.

Expect the Unexpected: Anticipating Volatility in the Housing Market

As we look toward the next presidential term, a recurring theme is emerging for homeowners and homebuyers alike: expect the unexpected.

From anticipated shifts in federal policies to market reactions, the housing market is likely to experience volatility in the coming months. Let’s explore what to watch for in this dynamic environment and how homeowners and potential buyers can prepare.

What to Expect After the Election

Historically, home sales have shown resilience after presidential elections, often bouncing back despite the initial jitters that come with a change in administration. After all, the housing market is fundamentally driven by demand, interest rates, and supply—factors that are often only tangentially affected by political changes.

However, in the wake of this particular election, with a “red sweep” across the government, there may be significant shifts in housing policies that could either stabilize or further stir the market.

Anticipating Market Volatility

With the recent change in administration, analysts expect some early turbulence in the housing market. Already, President Trump’s return has driven up the 10-year Treasury yield,which in turn pushed the 30-year fixed mortgage rate above 7%—a significant increase from earlier this year. This jump underscores the sensitivity of the housing market to shifts in government leadership, especially when new policies affect inflation, interest rates, and economic stability.

Housing affordability remains a top concern for many Americans, yet experts question whether recent proposals will truly address the underlying issues. Ken Johnson, a finance professor and real estate economist, notes, “Both Republicans and Democrats have introduced proposals that sound good on paper, but unfortunately, they haven’t done enough to address the housing shortage over the last decade.”

Most economists agree that the core issue driving the affordability crisis is a severe housing shortage, with an estimated gap of 2.5 to 7.2 million homes over the past decade. This shortfall has been exacerbated by both geographic limitations and regulatory barriers that have constrained housing development in high-demand areas.

While Trump’s plan to reduce regulations for homebuilders could yield some modest gains, other proposals—like large tariffs and mass deportations—could inadvertently worsen supply issues. Economists caution that these measures might introduce new challenges for the housing market rather than providing solutions. A more comprehensive approach is likely needed to address the root causes of the housing crisis, such as affordability and availability.

Key Factors to Watch in the Months Ahead

1. Federal Reserve Meetings. The Federal Reserve plays a major role in shaping the housing market by adjusting interest rates to combat inflation or stimulate growth. Following the recent election, many analysts are closely watching the Fed’s next moves. Should inflation remain stubbornly high, the Fed may keep interest rates elevated for longer, which would continue to influence mortgage rates and overall affordability.
2. Policy Impacts on Inflation. High inflation has been a major factor in the recent rise of mortgage rates, and President Trump’s administration has hinted at multiple strategies to combat it, from deregulation to tax incentives. However, balancing economic growth with inflation control is a delicate process, and homeowners will likely see some level of volatility as these policies take shape. While these steps aim to bring inflation under control, short-term increases may still impact affordability, especially as new initiatives like tariffs and immigration policies influence prices.
3. Supply and Demand Shifts. President Trump’s administration has indicated a strong interest in expanding housing by opening limited areas of federal land for development. This approach could improve the supply of homes for first-time buyers, although it’s unclear how quickly these policies would take effect. Additionally, the administration’s stance on controlling immigration is positioned as a solution to reduce housing demand pressures. However, only time will tell if these measures will substantially lower home prices or merely add complexity to the market.

Preparing for the Future

While we may not know exactly what’s coming next, preparing for potential volatility can help you make smart, sustainable choices. If you’re considering buying a home or exploring refinancing options, reach out to us at the Oddo Group. We’re here to support you every step of the way in your journey to homeownership—whatever the future holds.

Stay Ahead of the Game: How Savvy Homebuyers Can Thrive in Today’s Market

Ready to jumpstart your success? With the mortgage market expected to surge 28.5% to $2.3 trillion in 2025, now’s the time to get pre-approved and gain a competitive edge. This significant growth signals a thrilling opportunity for homebuyers and sellers alike, and we are here to help you capitalize on it.

At the Oddo Group, our experts have the insider knowledge to guide you through the competitive landscape. We’ll provide valuable insights and expert advice to streamline your mortgage process, ensuring you’re well-equipped to navigate the bustling market. Let’s dive into the strategies and tips to propel you ahead of the competition!

The Mortgage Market Shift

Get ready for a big change. Next year, we’re expecting a 13% increase in home loans, hitting $1.45 trillion. Plus, with interest rates likely dropping to 5.9%, it’s a golden time for buying a home or refinancing the one you have. This is the moment you’ve been waiting for if you’re looking to step into the homebuying arena.

Getting Ahead: Expert Tips

• Lock in Lower Rates: Interest rates are hovering around 6% now. Grabbing a lower rate today means saving big bucks down the road.
• Explore Refinancing Options: Refinancing could mean lower monthly payments or a chance to cash out some of your home’s value for other big plans you might have.
• New Home Opportunities: More homes are up for sale, giving you plenty of options to choose from. Whether it’s your first purchase or you’re looking to upgrade, now’s the time.
• First-Time Buyer Advantages: There are sweet deals and beautiful new homes waiting just for first-time buyers. Jump on these opportunities!

Navigating the Market with Confidence

Knowledge is your best tool. By keeping up with the latest market trends and having a trusted mortgage expert by your side, you’ll walk through the home buying process like a pro. Here at the Oddo Group, we’re ready to tailor your buying strategy to fit your needs perfectly and help smooth out the paperwork.

Unlock Your Homebuying Potential

Understanding the market can open doors to fantastic opportunities. Our expert team at the Oddo Group is here to help you make wise decisions, steer clear of common pitfalls, and lock in the home of your dreams.

Staying Ahead of the Competition

We transform market insights into real benefits for you. Our guidance is crafted to put you ahead of the rest, making sure you have the upper hand.

Additional Tips for Success

• Watch Interest Rates Like a Hawk: Knowing when rates drop can help you decide the best time to make a move.
• Boost Your Credit Score: A better score can lead to better loan conditions.
• Dig Into Mortgage Options: Understand what’s available and find the best fit for you.
• Plan for Closing Costs: Make sure you’ve got the finances covered for the final steps in buying your home.

Your Partner in Homeownership

The team at the Oddo Group is more than just lenders—we’re your partners in making homeownership happen. We offer personalized advice, competitive rates, and a hassle-free application process.

Ready to Shine?

Don’t let the competition leave you in the dust. Team up with the Oddo Group and make today’s market your stepping stone to owning your perfect home.

Mortgage rates have experienced a rollercoaster ride in recent months. After dipping earlier this year, rates have slightly increased over the past week. But what does it really mean for you, the homebuyer? Amidst these fluctuations, it’s essential to understand the bigger picture and how rates impact your homebuying journey.

Our team takes pride in demystifying the homebuying process, one conversation at a time. In this article, we’ll explore the realities of mortgage rates, provide practical strategies for navigating the current market, and help you make informed decisions.

Mortgage Rate Reality Check

Recent rate hikes have pushed the average 30-year fixed mortgage rate to 6.5%. This increase may seem daunting, but let’s put it into perspective. Despite the Federal Reserve’s efforts to cut interest rates, mortgage rates are influenced more by the yield on 10-year treasury bonds. This means that even with rate cuts, mortgage rates may not decrease immediately.

What This Means for Homebuyers

While rising mortgage rates may impact affordability, the housing market remains resilient. Here are key takeaways to keep in mind:

• Consider Refinancing When Rates Drop: If rates decrease, refinancing your loan can help you secure a better rate and lower your monthly payments. We’ll work with you to determine if refinancing makes sense for your situation.
• Look for Opportunities In a Less Competitive Market: With fewer buyers competing for homes, you may have more negotiating power and better chances of landing your ideal property.
• Focus On Long-Term Gains: Home prices tend to appreciate over time, making homeownership a solid investment. We’ll help you see beyond the short-term rate fluctuations and focus on your long-term goals.

Navigating the Market with Confidence

At the Oddo Group, we’re dedicated to helping you achieve your homeownership goals. Our expert team will guide you through:

• Finding the Right Mortgage Option: We’ll work with you to determine the best loan program for your needs, considering factors such as fixed-rate stability, adjustable-rate flexibility, and government-backed loan benefits.
• Developing a Rate Strategy: Our experts will advise on navigating rising rates, including rate locks to secure favorable rates, rate float downs to capitalize on rate drops, and refinancing options to lower your rate or monthly payments.
• Creating a Personalized Financial Plan: We’ll create a tailored plan for homeownership success by understanding your financial situation, credit score, and long-term goals, and providing guidance on budgeting, credit management, and investment strategies.
• Getting Preapproved and Leveraging Equity: Our preapproval process will help you determine your purchasing power, identify potential roadblocks, and strengthen your offer with a preapproval letter. We’ll also explore cash-out refinancing, down payment strategies, and investment opportunities to maximize your equity.
• Ongoing Support: Our partnership extends beyond closing, with ongoing monitoring of market trends and rate changes, guidance on mortgage maintenance, and support for future financial milestones.

With the Oddo Group, you’ll have the expertise and support to navigate the market with confidence. Don’t let rising mortgage rates fears hold you back. With the right guidance and knowledge, you can confidently navigate the housing market.

Contact us today to discuss your homebuying goals and create a personalized plan!

Finding Your Ideal Mortgage Rate: What Number Are You Waiting For?

If you’ve been keeping an eye on the housing market the last few years, you likely already know how much the mortgage rates have significantly impacted the industry. Many people (maybe yourself included) have found it extremely challenging to afford jumping into the market. However, recent developments offer some encouraging news—mortgage rates have begun to decline, reaching some of the lowest levels we’ve seen so far in 2024.

This shift raises an important question: what mortgage rate are you waiting for before making your move? Let’s explore the current economic landscape, expert predictions, and how you can determine the right rate for your home-buying journey.

Understanding the Current Economic Situation

The Federal Reserve has played a crucial role in managing inflation and stabilizing the economy, particularly in the aftermath of the COVID-19 pandemic. According to Chair Jerome Powell, the most severe economic distortions from the pandemic are fading, leading to a significant decline in inflation. As a result, mortgage rates have started to fall. Powell expressed confidence that inflation is on a sustainable path back to the Fed’s 2% target, which has been instrumental in the recent drop in mortgage rates.

What Are Experts Predicting for Mortgage Rates?

Economic experts generally agree that as inflation continues to ease, mortgage rates are likely to follow a downward trajectory. However, this doesn’t mean rates will decrease in a straight line—there will likely be some fluctuations as new economic data emerges. Despite these short-term variations, the overall trend is promising. Compared to the peak rates seen earlier this year, we’ve already experienced a decline of about one percentage point.

For example, Realtor.com recently revised its 2024 mortgage rate forecast, predicting that rates could average around 6.7% for the year and potentially dip to 6.3% by year’s end. This optimistic outlook is based on the expectation that the Federal Reserve will begin to ease its restrictive monetary policies as inflation becomes more manageable.

What’s Your Target Rate?

As the rates continue trending downward, it’s essential to consider what rate would make you feel comfortable enough to start your home search. Whether it’s 6.5%, 6.0%, or even lower, the rate you choose should align with your financial situation and long-term goals. Here are some key questions to help you identify your target rate:

• What monthly payment can I comfortably afford?
• How much of a down payment am I planning to make?
• How long do I plan to stay in the home?
• What impact will different interest rates have on my overall budget?
• How much have home prices in my desired area changed recently?
• Am I prepared to act quickly if rates hit my target?

Answering these questions can help you determine a rate that makes sense for your budget and future plans.

Why Waiting Could Cost You

While it might be tempting to wait for rates to drop even further, it’s important to consider what that could cost you. For every 1% drop in mortgage rates, approximately 5 million more households become eligible to buy a home. This increase in competition could lead to multiple offers on the homes you’re interested in, making it harder to secure your dream home.

Moreover, the perfect home might not be on the market forever. If you wait too long, you might miss out on your ideal property because someone else was ready to act when rates hit their target.

How to Stay Prepared

Once you’ve established your target rate, you don’t need to monitor rates daily. Instead, consider partnering with a trusted mortgage professional who can keep an eye on the market for you. They can notify you when rates reach your desired level, ensuring that you’re ready to act when the opportunity arises.

At Luminate Home Loans, we also monitor the rate environment for refinancing opportunities, so you can take advantage of a lower rate later if they continue to drop. Our philosophy? Date the rate, marry the house. By securing your dream home now, you can always refinance to a better rate when the opportunity arises.

In Conclusion

If you’ve been holding off on purchasing a home due to higher mortgage rates, now is an opportune time to reassess your plans. Remember – just a 1% drop in rates could bring millions of new buyers into the market, increasing competition and making it harder to find and secure your ideal home.

Talk to your lender about setting a target rate that aligns with your financial goals, and work closely with them to stay informed. By being proactive and setting a clear target, you’ll be better positioned to take advantage of favorable market conditions and make a confident, informed decision when the time is right.

When you’re ready, we’re ready—reach out to us if you have any questions. And remember, with our “Buy Now, Sell Later” program, we can help you navigate your home-buying journey with confidence.

In an ever-changing financial landscape, many investors are asking whether real estate remains a strong investment. You may be surprised to learn that, despite economic fluctuations, the real estate market continues to demonstrate its value.

How? Well, let’s dive into the details on why real estate remains a smart choice for those looking for a stable and profitable investment in today’s economy.

1. Tangible Asset with Intrinsic Value

Real estate is a physical asset you can see and touch. Unlike stocks or bonds, property ownership provides a sense of stability and security. Regardless of market conditions, you possess a valuable asset that fulfills a basic human need—shelter

2. Appreciation Potential

Over time, real estate typically appreciates in value. While there may be short-term dips, the long-term trend has historically been upward. This appreciation is driven by factors such as population growth, urban development, and inflation. By holding onto property, investors can see significant returns on their initial investment.

3. Income Generation

Real estate offers the unique benefit of generating income. Rental properties provide a steady stream of revenue that can help cover mortgage payments and other expenses. This rental income can also serve as a reliable source of passive income, making real estate a popular choice for those seeking financial independence.

4. Tax Benefits

Investing in real estate comes with numerous tax advantages. Investors can deduct expenses related to property maintenance, mortgage interest, and property taxes. Additionally, the IRS allows for depreciation deductions, which can significantly reduce taxable income. These tax benefits can enhance the overall profitability of a real estate investment.

5. Hedge Against Inflation

Real estate is often viewed as a hedge against inflation. As inflation rises, so do property values and rental income. This means that real estate investments can help protect your purchasing power and provide a buffer against the eroding effects of inflation on your wealth.

6. Leverage Opportunities

One of the unique advantages of real estate is the ability to use leverage. By using borrowed money to finance a property purchase, investors can amplify their returns. With relatively low interest rates still available, leveraging a real estate investment can be an effective strategy for building wealth.

7. Diversification

Real estate can diversify an investment portfolio, reducing overall risk. Unlike stocks and bonds, which are subject to market volatility, real estate often moves independently of traditional financial markets. This diversification can help stabilize returns and provide a more balanced investment strategy.

8. Control Over Investment

Real estate investors have greater control over their investment compared to other asset classes. Decisions about property management, improvements, and rental strategies are directly in the hands of the investor. This control allows for the implementation of strategies to increase the property’s value and maximize returns

Conclusion

In summary, real estate remains a strong investment option due to its tangible nature, appreciation potential, income generation, tax benefits, and ability to hedge against inflation. With opportunities for leverage and diversification, real estate continues to offer a compelling case for investors seeking stability and growth.

As with any investment, it’s essential to conduct thorough research and consult with financial advisors to ensure it aligns with your overall investment strategy. Whether you’re a seasoned investor or new to the market, considering real estate as part of your portfolio could be a prudent move in securing your financial future.

Is AI Being Used in the Mortgage Industry? Yes, But Not Like You Might Think!

Unless you’ve been living under a rock, you’ve likely noticed a surge in discussions about artificial intelligence (AI) in the media. From generating images to solving complex mathematical problems, AI’s capabilities are vast, and constantly growing. Originating in the 1950s, AI has evolved significantly and is now a staple in our everyday lives.

But with AI becoming more accessible commercially, many businesses are adopting it to enhance efficiency in routine tasks. At Luminate, our team leverages AI to optimize workflows, organize data, and much more. But what about the rest of the mortgage industry?

AI Uses in Mortgage

Fun fact – AI has been used in the mortgage industry since approximately the early 2000s when Frannie Mae and Freddie Mac implemented automated underwriting systems. As AI has grown and improved, its use in the industry has expanded in several impactful ways:

Data Extraction

Ask any seasoned loan officer about originating mortgages in the past, and they’ll likely highlight the cumbersome amount of paperwork involved. Think about it – one mortgage transaction can contain hundreds of pages of paperwork, documents, reports, etc.

For example, if one person had five loans to process and each loan had 100 pages of paperwork to manually review, that could take over 24 hours to get through all of those pages. This is just an exaggerated example, but you get the idea. Now, AI simplifies these mundane tasks, allowing what once took hours to be completed in just a few clicks, significantly speeding up the workflow.

Compliance & Risk Management

A big part of the mortgage industry is risk management – or, more simply, verifying how much of a risk or non-risk an applicant is. This process used to be painstakingly manual and could leave room for error, missed documents, or even unintentional bias.

With AI enhancements, lenders can now look at multiple data points like credit scores, income details, employment history, etc. much more quickly and easily. This helps lenders make more accurate and unbiased lending decisions which is something we are very passionate about here at Luminate.

Improved Customer Experiences

It’s no secret that in today’s fast-paced world, most of us want information immediately or as quickly as possible (thanks Google). Thanks to AI, lenders are able to implement more technology that helps make the mortgage process more accessible for the general public.

For example, by using AI for automations, loan applicants can get information about their loan almost instantly instead of waiting around for a human response. Now when you apply for a mortgage, you get instant automated updates on the status of your application, when documents are verified, and so much more.

The Future of AI in Mortgage & What it Could Mean for You

AI is a topic of considerable debate, but when used appropriately, it’s simply another tool to streamline processes. In the mortgage industry, AI is not replacing human workers; it’s enhancing their efficiency and effectiveness. The future is here, and the intersection of AI and mortgage continues to evolve.

At Luminate, we hold the conviction that the mortgage process will always benefit from a human touch. While AI can expedite procedural aspects, it cannot fully grasp the emotional nuances of making such a significant purchase. Our team is committed to ensuring that home ownership is attainable for everyone, combining AI with a human-first approach to deliver optimal, unbiased outcomes.

So, let’s build the future together, where AI supports and enhances our efforts to provide exceptional service and solutions.

It’s undeniable that both buying and selling real estate agents bring tremendous value to the families they serve. Navigating the selling or purchase of the largest asset most American’s will ever buy, undoubtedly requires advice, perspective, and execution by a real estate professional. But not all agents are the same – some offer more services and value than others. This evolving real estate commissions structure will better enable buyers and sellers to pay for the value they see in their real estate partner.

Understanding the Changes: A New Era for Real Estate Transactions

At the heart of this development is a landmark settlement involving the National Association of Realtors (NAR), which is set to transform the traditional broker commission model. This Cooperative Compensation Agreement, which has been a standard practice in the industry, was challenged for potentially leading to a lack of transparency and higher real estate commissions fees for home sellers.

With a proposed settlement of $418 million, this change is poised to introduce a new structure that could enhance transparency.
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What Does This Mean for You?

1. Commission Rates: The traditional 6% commission-sharing structure is being revisited. This means that the fixed industry-standard commission rates could become a thing of the past, giving you more room to negotiate commission rates that reflect the value of the services provided. 
2. Enhanced Competition Among Agents: With the elimination of traditional commission sharing, real estate agents will be encouraged to compete more actively for your business. This competition could lead to more innovative and cost-effective services being offered to you as sellers and buyers search for agents who provide the best value.
3. Transparency and Choice in Professional Relationships: The settlement encourages a clearer understanding between you and your agent regarding the services provided and their costs. This could lead to more personalized and transparent professional relationships, ensuring that you receive the services that best meet your needs.

Navigating This New Landscape

As these changes are poised to take effect in July 2024, it’s an opportune time for you to consider how this might affect your real estate decisions. Whether you’re contemplating buying a new home or selling your property, this evolving landscape offers new possibilities for negotiating and engaging with real estate professionals.

Your Next Steps

To navigate this new environment effectively, consider the following actions:

• Stay Informed: Keep abreast of the developments as the court’s approval process unfolds and understand how these changes could have an impact on your local real estate market.
• Seek Professional Guidance: Engage with real estate professionals who are adapting to these changes and can offer you the most valuable and transparent services.
• Evaluate Your Options: Consider how these changes might influence your real estate strategy and adjust your approach to make the most of the new landscape. It is possible your fees to use a buyer agent in the acquisition of your new home, may not be covered by the seller and may fall into the category of buyer’s closing costs.

As your guide in this journey, we’re here to provide you with the insights and support you need to make the most informed decisions in this new real estate era. Reach out to the Oddo Group to better understand how these changes will impact your homebuying or selling experience.

With concerns about high interest rates and memories of past financial uncertainties, many are questioning whether it’s the right time to buy. Despite these concerns, experts highlight a critical difference from past issues: a current shortfall of around 5 to 6 million housing units.

Why is There a Shortage?

This shortage is primarily due to the building industry not keeping up with the increasing demand for homes. To match population growth, about 1.5 million new homes need to be built each year, a target that has been missed consistently since 2008. Looking back over decades of data, it’s clear that this underbuilding has led to the tight housing market we see today.​

The impact of this shortage is evident when considering the number of homes currently for sale—only about 500,000, far below the usual 2.6 million. Many of these homes are in such poor condition that they’re hardly considered viable options, making the effective inventory even smaller.

So, What Do We Do?

This situation isn’t just about numbers; it’s a real concern for anyone hoping to buy a home. The lack of available homes is expected to push up prices and rents, making it harder for potential buyers to find affordable options.

However, it’s important to remember that even in a challenging market, opportunities exist. Being well-informed and understanding the market’s nuances can help you identify these opportunities. Whether it’s finding a hidden gem in a tight market or navigating the complexities of purchasing in a time of shortage, knowledge is your best asset.

Conclusion

In conclusion, while the path to homeownership might seem daunting in today’s market, it’s not insurmountable. By educating yourself about the current housing landscape and seeking the right advice, you can navigate these challenges and move closer to finding your dream home.

We’ve been saying for a while that mortgage rates will start making meaningful progress lower once we enter a recession, but the economy has been surprisingly resilient even in the wake of the most aggressive interest rate hikes in history. As it stands at the start of 2024, the U.S. is still not currently in a recession, according to the traditional definition (a significant decline in economic activity that is spread across the economy and lasts more than a few months).

The job market remains one of the U.S. economy’s main engines, with the nation’s unemployment rate near a 50-year low and wages finally pulling ahead of inflation. At the same time, major companies in technology, finance, media and other key sectors have all recently announced sizable job cuts, with layoffs nationwide more than doubling in January from a month earlier.

This positive jobs report and continued delay of an economic downturn has given even more credence to those who believe the Federal Reserve will be able to achieve a “soft landing” for the economy – raising interest rates just enough to slow the economy and reduce inflation without causing a recession.

But is the U.S. labor market really as “healthy” as the headlines say? Let’s find out.

January Jobs Reports Show Conflicting Numbers

In their analysis of the most recent labor data from The Bureau of Labor Statistics (BLS), MBS Highway notes that January’s jobs report might not be the blockbuster that it appears to be on the surface.

The BLS reported that there were 353,000 jobs created in January, which was nearly double expectations. Revisions to November and December also added 126,000 jobs in those months combined.

According to MBS Highway, while the headline job growth figure for January appears strong on the surface, future revisions lower are a very real possibility. January is always a heavily adjusted month, as new benchmarks, seasonal adjustments and population controls play a big role in calculating the data.

The Household Survey, where the Unemployment Rate comes from, is considered more real-time because it’s derived by calling households to see if they are employed. This survey has its own job creation component and it told a completely different story, showing 31,000 job losses.

Average weekly hours worked also declined to the lowest level since 2010 (excluding the pandemic). This is important because one of the ways businesses cut costs is to cut the number of hours worked. On average the entire labor force is working 30 minutes fewer per week, which equates to 2.4 million job losses on its own.

What’s more, ADP’s Employment Report showed that private payrolls began 2024 slower than expected, with employers adding just 107,000 new jobs in January.

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings were stronger than expected in December, rising from 8.925 million in November to 9.026 million. The hiring rate rose from 3.5% to 3.6% while the quit rate remained at 2.2%, suggesting there’s a lack of employers trying to entice workers with other offers.

There’s also the unemployment claims. The latest weekly Initial Jobless Claims reached their highest level since November, as 224,000 people filed for unemployment benefits for the first time.

Continuing claims also surged higher, up 70,000 with 1.898 million people still receiving benefits after filing their initial claim. Both Initial and Continuing Jobless Claims have risen over the last two weeks to nearly three-month highs.

Why We Believe Mortgage Rates are Heading Lower

Inflation is declining, but further declines are dependent upon continued slowing in the labor market. The latest jobs numbers, while they might show some strength right now, hint at weakness that could encourage Fed policymakers to permanently halt any future rate hikes.

A slowing economy is deflationary, and mortgage rates always follow the direction of inflation: higher in inflationary markets and lower in deflationary markets.

Layoffs are a harbinger for slowing economy, and there has been an uptick in job cuts recently across technology and media. Alphabet, eBay, TikTok, and the Los Angeles Times have all recently announced layoffs. And just recently, Snap (the owner of Snapchat) announced it was cutting 10 percent of its workforce. UPS, Macy’s, and Levi’s also recently cut jobs.

We are seeing multiple indicators of layoffs, rising continued jobless claims, and a rising unemployment rate.

The unemployment rate has risen from a low of 3.4% in April 2023 to 3.7% currently. Every time the unemployment rate has bottomed and moved higher, a recession has followed. Recessions are deflationary by definition and therefore bring lower mortgage rates and greater housing affordability with them.

The Bottomline

While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing.

But remember, a slowing market does not mean a crashing one! Even though mortgage rates have increased, demand for homes is still very high. This has led to home prices reaching all-time highs in many areas of the country.

Mortgage rates will drop when the economy slows down, which we expect to happen later this year or in the beginning of 2024.

When that happens, even more people will want to buy a home. This will keep home prices rising, which means the sooner you buy a home, the sooner you will benefit and see your home equity grow.