Northwestern Mutual, Special Spaces Recognize 10-Year Anniversary of Company’s Childhood Cancer Program with 10 Dream Bedroom Makeovers HGTV star Mina Starsiak Hawk collaborates on latest bedroom reveal for a child in her hometown MILWAUKEE, Nov. 17, 2022 /PRNewswire/ — In recognition of its Childhood Cancer Program’s 10-year anniversary, Northwestern Mutual, through its Foundation, collaborated with Special … [Read more…]
We are moving to Fruita, Colorado! Fruita is a small town near the town of Grand Junction (which is small as well), on the western side of Colorado.
Even though we came across many Craigslist scams, we found one house that we absolutely loved. We loved the location, the house was nice (the picture in this post is of the house we are renting), and it was below our budget.
We had everything pretty much riding on this one house though. We didn’t find anything else in the area that we liked and rentals seemed to go very fast in this small county.
We were nervous, but submitted an application and were accepted just a few days later.
The rental house is $1,400 per month, which is more than what we pay for the house we currently own. However, I’m still happy with this amount as our budget was $2,000 per month, which was an amount that I didn’t want to really reach.
Some of you may be wondering why we chose Fruita of all places in Colorado. It wasn’t even on our radar until recently, so I’ve never talked about this small town on my blog until today.
We chose Fruita, Colorado for many reasons:
The location is amazing. We are close to many different areas and near the highway so we can have day trips to some amazing places in the area. There are things to do to the west, to the east, to the north, and to the south. Some of these places are below.
We are located right next to Colorado National Monument. This means we’re just two miles away from rock climbing, hiking, bicycling, camping, and more in this awesome national monument. We are also right next to Rattlesnake Canyon which has the highest amount of arches outside of Arches National Park. Then there’s also the Kokopelli Trail that goes all the way to Moab from Fruita.
We are close to all of the outdoorsy fun in Moab, Utah. We are one hour away from Arches National Park and 1.5 hours away from Canyonlands National Park. We LOVED Moab when we visited last year, so we wanted to be close to this area.
Other places close by include Grand Mesa National Forest (I’ve heard the many lakes here are beautiful), Dinosaur National Monument, Uncompahgre National Forest, Gunnison National Forest, and more.
There are tons of things to do in the area including rock climbing, skiing, hiking, canyoneering, rafting, mountain biking (some of the best mountain biking is said to be right here), visiting one of the many wineries in the area, and more. While I haven’t done some of these things before, I definitely want to get more into them.
The weather. While the mountain towns in Colorado are beautiful, I knew I wasn’t ready for super cold weather just yet. Fruita has weather fairly similar to St. Louis, except that there’s way less humidity. The weather is perfect for us.
It’s affordable. We looked for rental homes in other areas, but couldn’t find what we were looking for unless we wanted to increase our budget by a few thousand dollars each month. That just wasn’t going to happen.
And those are some of the reasons for why we chose Fruita, Colorado. While we don’t know if we will be here next year (location independence for the win), I know that we will have a ton of fun exploring this new-to-us town while we have the chance.
Now, onto my moving bucket list.
Colorado National Monument
My Moving Bucket List
In less than two weeks, we will move over 1,000 miles away, as well as put our house on the market. This is probably the biggest change ever for the both of us.
Even though I will miss St. Louis a lot, I know we will have fun in Colorado. I am ready to leave St. Louis and see what else there is for us.
Before I move though, there are many things I plan on doing as sort of a bucket list so that I can enjoy the time we have left here.
I know we will be back again to visit friends and family, but creating a “moving bucket list” sounded like fun.
1. I plan on seeing my friends and family as much as possible.
While I don’t have any family left in St. Louis, Wes does. We will miss them dearly and plan on visiting often because we know we will miss them too much.
I also plan on hanging out with my friends as much as possible. I know I will miss my friends a lot.
I have several dates planned with all of them and I want to squeeze every second I can into my schedule so that I can see them as much as possible. This will be the hardest part of moving for me – not seeing my close friends as much as I currently see them. Luckily, I already know that I will be back in St. Louis three more times this year, so I will take full advantage of those times whenever I come into town. Love you guys!
2. I want to eat at my favorite restaurants.
Okay, so the rest of this moving bucket list isn’t as serious, but I still wanted to include them because before we leave I need to get a good fix on my favorite meals. I’ve already visited and said goodbye to my favorite Mexican restaurant located up the street, my favorite Korean restaurant, and I also went to my favorite bakery.
Now, I just need to eat enough fresh gooey butter cookies and some delicious St. Louis BBQ in order to be happy.
3. I need to visit my hair stylist.
Before you think I am a bad finance blogger for spending a ton of money on my hair, that is not true. I visit her just twice a year, but she is amazingly good at what she does and she is quite affordable.
I actually have an appointment with her today and I am still not sure what I plan on doing but I’m excited! Wish me luck!
4. I want to enjoy our house.
Our house is currently a construction zone with all of the updating that we are doing (read the post 5 Tasks We Need To Complete In Order To Sell Our Home Quickly if you are interested in what we are doing), but I still want to enjoy our house as much as possible.
This house is the first house we have ever bought (and the only one we have ever bought), and if you couldn’t tell already, I have attachment issues and I get attached to things pretty easily haha!
Most of our clutter is already packed away, donated, or thrown away, so there isn’t much left to enjoy except for our actual house, but I will find a way to enjoy it! I want to cook in my kitchen as much as I can, enjoy sleeping in my bedroom, and more.
For the last two weeks that we have, I am just going to take in all of the wonderful memories that I have had in St. Louis. Everything has been great here, but I am ready for the outdoorsy fun and beauty that Colorado will allow us to have.
What tips would you give to someone who is planning a long distance move? What would you add to your moving bucket list if you were to move somewhere far away?
11 Northwestern Mutual Advisors Named Among Nation’s Best in New Barron’s Ranking MILWAUKEE, March 13, 2023 /PRNewswire/ — One of the country’s premier financial news publications has named 11 Northwestern Mutual-affiliated advisors – to its list of the nation’s top wealth professionals. “Northwestern Mutual’s comprehensive approach to financial planning is proven to deliver better financial … [Read more…]
Is your real estate business running you ragged? Consider starting a real estate team! On today’s podcast with Amy Florida, we discuss what it takes to start a new team and why it’s beneficial for overworked but successful solo agents. Tune in and discover what it takes to attract competent agents and how to generate leads to keep them productive without blowing your budget. Amy also shares insight on geographic farms, client-focused events, and more.
Listen to today’s show and learn:
The St. Louis real estate market [2:01]
Why St. Louis is a great place to own and sell real estate [4:19]
What the best real estate agents are worst at [6:13]
Amy Florida’s start in real estate [9:08]
A repeatable system for six-figure income in real estate [11:58]
Amy’s first year in real estate and career progression [19:24]
Leveraging buyer’s agents to reduce your workload [20:13]
Advice for busy real estate agents on starting a team [23:24]
Starting new agents with shadowing [26:17]
Where Amy gets her real estate leads [28:00]
How to start a geographic farm in your market [30:45]
The effort required to host an Easter-egg hunt [33:51]
The number of losses it takes to get to a win [44:45]
How to find and follow Amy Florida [47:28]
Amy Florida
Known to the team as ‘Hustler in Charge’ aka ‘Head Homeslinger’, Amy is honored to lead the daily grind in this dynamic and outrageously fun group! She has been in the real estate industry for over 10 years and has worked diligently to be a Multi-Million Dollar Producer each and every year. She led the team last year in an overall production of $23.4 Million Dollars and over 80 families assisted. Aside from being a tired momma of Charli, Lily, and Parker, Amy is an avid rock and roll concert goer, musician, yogi, and traveler. The business of helping people sell and buy their most valuable asset is something that she feels grateful to be able to wake up and do each and every day. With extensive knowledge of the greater St. Louis and St. Charles area markets, local builders large and small, investment real estate, and all things houses, she and her team is THE group you want on your side!
Related Links and Resources:
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
[Editor’s note: This is Part I of a two-part series on whether it makes sense to include gold in your portfolio. Part II is “Why gold should be part of your investment portfolio.”]
Humans have valued gold for several millennia, and that will likely continue. It is understandable, then, that a human such as yourself might consider trading some green for gold. I say, “Don’t bother,” and here’s why….
1. Gold isn’t a consistently good investment
The wisdom of an investment decision depends on when you buy and when you sell. This makes all kinds of things — from dot-com stocks to Beanie Babies — extraordinarily good investments … as long as you sell before prices plummet.
Gold is no different, as current owners know; it was a fabulous investment through most of the 2000s, but has lost a third of its value since 2011. This isn’t unusual. Check out the returns on an ounce of gold over the past 40 years, based on data from the Federal Reserve Bank of St. Louis. The rolling returns measure performance over various holding periods, each starting a year later. For example, five-year rolling returns are the average annual price changes in gold starting with 1975-1979, then 1976-1980, then 1977-1981, and so on. The “% Positive” is the percentage of times that gold was at a higher price over the indicated period.
Gold , 1975-2014
1-yr Returns
Rolling 3-yr. Returns
Rolling 5-yr. Returns
10-yr. Rolling Returns
Best
146.1%
60.1%
33.4%
11.4%
Worst
-32.6%
-13.4%
-11.3%
-5.1%
% Positive
57.5%
55.3%
66.7%
67.7%
Most investments have short-term volatility and ever-present unpredictability, but gold is all over the place. Most investors would consider a decade long enough of a holding period to ride out the ups and downs of a volatile asset. However, a third of the 10-year returns for gold were negative. I don’t know about you, but I’m not thrilled to invest in something today that, historically, has a one-in-three chance of being worth less in 2025.
2. Gold isn’t an inflation hedge
You invest today in order to pay for something in the future. Thus, your investments will need to keep up with whatever that something costs years down the road. Unfortunately, gold may not do it for you.
Cast your eyes once again upon the table above and ponder whether an asset that loses value over many multi-year periods is an effective inflation-fighter.
Also, consider this: The price of gold reached approximately $850 an ounce in 1980, and then began a long decline that didn’t end until 1999 at around $250. Gold didn’t exceed its 1980 peak until 2008. That’s a 28-year period during which gold didn’t increase in value. Something that cost $1,000 in 1980 cost $2,600 in 2008 due to inflation, and gold did nothing to make up the difference.
3. Gold isn’t a “productive asset”
In his 2012 annual letter to Berkshire Hathaway shareholders, Warren Buffett described three types of investments. The first is what he called “investments that denominated in a given currency” — e.g., cash and bonds.
The second type are “assets that will never produce anything,” such as tulips (the subject of a 17th century speculative mania), houses, and gold. Buffett pointed out that the total value of all the world’s gold (170,000 metric tons) could be melded together to form a cube that is roughly 68 feet per side. Back in 2012, that cube would have been worth $9.6 trillion — enough money to buy up all the cropland in the U.S. as well as 16 ExxonMobils, and still have $1 trillion left over “for walking-around money.” A century later, all that land and all those oil companies will have produced trillions of dollars’ worth of food and dividends, but the gold will still be just 170,000 metric tons of metal.
Those farms and ExxonMobils are examples of Buffett’s third (and preferred) category: investments that make things or provide services and can charge higher prices during inflationary times. For the average person, the easiest way to do this is by owning pieces of hundreds of businesses via a low-cost index fund, a productive asset that Buffett recommends for 99 percent of investors, including LeBron James on CNBC a couple of weeks ago.
Here is a version of that table above, but using the return figures for the S&P 500 index instead of gold.
S&P 500, 1975-2014
1-yr Returns
Rolling 3-yr. Returns
Rolling 5-yr. Returns
10-yr. Rolling Returns
Best
37.2%
30.8%
28.3%
19.0%
Worst
-36.6%
-14.5%
-2.3%
-1.4%
% Positive
82.5%
84.2%
86.1%
93.5%
The average annual return for the S&P 500 over the entire period was 12.1 percent (compared to 4.3 percent for gold), which includes the cash that most companies pay their shareholders in the form of dividends. Historically, dividends have grown at a rate that meets or beats inflation. Why? Because companies charge higher prices over time.
Back in 1980, gas cost $1 a gallon, a new car cost something like $6,000, and $9 got you into the Magic Kingdom at Disney World. As prices have risen over the years — it now costs more than $100 to see Mickey up close and personal — companies have made more money.
You won’t receive such increasingly bigger checks from gold. It doesn’t fuel cars or fill bellies. It doesn’t provide transportation or entertainment. Yes, it looks pretty; but as Buffett wrote in that 2012 annual letter, “You can fondle the cube, but it will not respond.”
4. Miner losses, slow-growth jewelry, and taxes — oh, my!
Here are a few of my other beefs with bullion.
Some folks choose to invest in companies that work in the gold biz (such as miners) rather than the gold stuff itself, since these are businesses that make money by providing services that will be required as long as humans dig stuff out of the ground to make other stuff. However, these companies’ fortunes often ebb and flow with gold’s luster, which is partially why the Vanguard Precious Metals and Mining Fund has lost money in each of the past four calendar years as gold prices have crashed.
What about things made from gold, such as jewelry, that also have decorative, sentimental, and/or flaunting value? Whether an individual item is a good investment depends on many factors, including craftsmanship, taste, and all the materials used. But the U.S. Bureau of Labor Statistics does have a jewelry category in its calculation of the Consumer Price Index. An item that cost $100 in 1986 would be worth $166 today, according to this measure. That’s less than a 2 percent annualized return. Plus, such things have to be stored, secured, and insured, and are not easily converted into cash.
Most forms of physical gold are considered collectibles by the IRS, and short-term gains are taxed as ordinary income while long-term gains are taxed at a 28 percent rate — higher than the 15 percent to 20 percent long-term rate on stocks. That higher long-term rate also applies to the widely held SPDR Gold exchanged-traded fund (ETF) with the GLD ticker (unless held in a tax-advantaged retirement account).
For these reasons, I would not advocate keeping gold in your portfolio; but tomorrow’s post will offer different perspectives on the subject of gold. Perhaps my reasoning will tarnish the luster of including gold in your portfolio a bit; but then again, it is always wise to consider different points of view before coming to a decision on matters like these.
What do you think? Should gold be part of your portfolio?
Inflation is expected to continue “to decline across all horizons” over the next year while home price growth, too, is projected to decline “sharply” to the lowest level since July 2020, according to the most recent Survey of Consumer Expectations (SCE) released by the Federal Reserve Bank of New York.
The median one-year inflation expectation, the August SCE report shows, fell to 5.7%, down from 6.2% in July. Median home-price growth expectations fell by 1.4 percentage points in August compared with July, to 2.1%, which is the lowest SCE reading since July 2020.
“The decline was broad-based across demographic groups and geographic regions,” the August SCE report states. “Home-price expectations have now fallen by nearly two-thirds since the April 2022 reading of 6.0%.”
The SCE report is based on a nationally representative, internet-based survey of a rotating panel of some 1,300 heads of household. The report’s findings for August echo analysis of home-price data released in July by Black Knight Data & Analytics.
“Annual home-price growth shifted from deceleration to decline in July as the median home price fell 0.77% from June – the largest single-month decline since January 2011…,” Black Knight reported in its July Mortgage Monitor report. “Escalating declines in June and July have total tappable equity down 5% over the past two months, suggesting a sizeable reduction is likely in Q3, which would mark the first quarterly decline in three years.”
The Black Knight report notes that some of the most significant declines in tappable equity are occurring in equity-rich West Coast markets.
How will non-QM perform for the rest of 2022?
With inflation and rising rates, non-QM lending has spent the last few months in choppy waters, with some lenders closing their doors. However, the outlook for non-QM for the rest of 2022 is relatively optimistic, according to Acra Lending CEO Keith Lind.
Presented by: Acra Lending
“From April through July, San Jose lost 20% of its tappable equity,” Black Knight Data & Analytics President Ben Graboske said. “Seattle followed, shedding 18% of tappable equity over that same three-month span.
“Likewise, San Diego (-14%), San Francisco (-14%) and Los Angeles (-10%) have all seen double-digit declines since April.”
The amount of tappable home equity nationally hit $11.5 trillion in the second quarter of this year — after accounting for homeowners retaining at least 20% equity, according to Black Knight.
“With prices continuing to correct and our … HELOC data showing home-equity lending at its highest level in 12 years, we will keep a very close eye on equity positions in the coming months,” Black Knight’s July Mortgage Monitor report states.
Goldman Sachs, in a recent white paper titled “The Housing Downturn: Further to Fall,” projects that new and existing home sales are expected to drop by 22% and 17%, respectively, in 2022.
Still, despite the dour projections for the housing market ahead as we enter the third quarter of 2022, home prices through the second quarter of year reached a high plateau. Average home prices were up significantly in the second quarter of this year, to $525,000, compared with $440,600 for the same period in 2021, according to the Federal Reserve Bank of St. Louis. The median sales prices in the second quarter of this year was $440,300, compared with $382,600 for the second quarter of last year, the report shows.
“Higher home pricing and mortgage rates continue to curb homebuyer demand,” states Mortgage Capital Trading in its September 12 daily market report. “Mortgage rates climbed from 3.1% for a 30-year fixed in June 2020 to 5.8% on June 23, 2022, based on Freddie Mac’s rate-survey data.
“With a 3% down payment, this has pushed the average mortgage payment from roughly $1,900 to over $3,400 a month, taking home price and rate increases into consideration.”
Even if the inflation rate is finally moderating, however, don’t expect a break from the aggressive upward rate push by the Federal Reserve’s Federal Open Market Committee (FOMC) in its battle to stem rising inflation. Its next meeting is slated for September 20-21.
A recent “Fed Chatterbox” report from investment bank Goldman Sach’s Economics Research unit states that “several participants suggested that the FOMC could hike [rates] by either 75 or 50 basis points in September.”
“Chair Powell noted that, following the two 75 basis-point hikes in June and July, ‘another unusually large increase could be appropriate’ at the September meeting,” the Goldman Sachs report continues. “Last week, the Wall Street Journal reported that the FOMC ‘appears to be on a path to raise interest rates by another 0.75 percentage point this month,’ a likely hint from the Fed leadership that a 75 basis-point hike is coming at the September meeting.
“No FOMC participant has argued against delivering a 75 basis-point hike, and a few participants indicated that they preferred to frontload rate increases.”
Last Updated: February 11, 2019 BY Michelle Schroeder-Gardner – 48 Comments
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When I originally wrote this article, we had no offers on our home and we were feeling somewhat negative about it. However, last week we accepted an offer on our home and it’s scheduled to (hopefully) close in July.
It’s been nearly four months and our house hasn’t sold yet.
We’ve had exactly 30 showings and great reviews, yet no offers.
Not even a single lowball offer.
Our home is priced quite competitively and below comparables, so we are afraid to lower the price any further.
We are already going to lose money with what our home is priced at now so we are currently wondering about other possible options. I knew selling a home would be stressful, but I didn’t realize that it would be this stressful. Many ideas have been going through my mind but it’s hard to decide what the best decision is.
Below are some of the things we have been thinking about possibly doing since our house hasn’t sold yet.
Make a temporary decision.
There are many decisions we could make just for the time being.
We could take our home off the market temporarily to see if our neighborhood experiences a rebound. Temporarily doing this could be risky though as our neighborhood could lose value over time instead of gaining value.
However, there is a chance that our neighborhood could go up, which would mean that we might not lose as much money if we were to rent it out while we waiting for it to rebound.
Move back home.
Of course, one of our options is just to move back home since our house hasn’t sold yet. Right now we are just renting in Colorado, so we do have the option to move back home at the end of our lease.
This isn’t the ideal situation as we didn’t move ALL the way out here just to move back to St. Louis one year later. However, this is most likely our best choice as well as the most realistic one if it doesn’t sell.
Moving back home would also get rid of a lot of the worries that go along with the options below.
Rent our home to long-term renters.
We are debating renting out our home on a long-term basis. We could most likely find long-term renters somewhat easily and I definitely think we could charge more than our mortgage payment each month.
We wouldn’t get rich from renting it out to long-term renters, but it could be enough to cover our mortgage and possibly one day even pay it off and keep it as a rental forever. There also wouldn’t be a ton of work involved, at least not when compared to renting it out to short-term renters.
The major downsides of renting out our home on a long-term basis would be if we had bad renters and the fact that we would be long distance landlords. We might need a property management company and if we did that then the revenue from the monthly rent would be much lower.
Rent our home to short-term renters.
On the other hand, we could also think about renting out our home on a short-term basis on a website such as Airbnb, VRBO, or Homeaway. This would also allow us to have a place to come back to, which would be very nice.
The major downside to doing this is that we are so far away and it would be hard to manage something like this from states away. This is because someone would have to clean up after each stay, restock items such as toilet paper, and so on. I’ve also searched and there are no companies in our area that offer property management for vacation rentals either.
Drop the price significantly.
We originally priced the home below what we bought it for back in 2009, and we’ve dropped it since it’s been listed as well.
The last and least fun option would be to just drop the price until someone bites, but that would mean losing a significant amount of money.
However, the plus side would mean that the house would hopefully sell quicker. This is not an option I would ever want to take but it does exist…
Have you sold a house before? Did you ever feel panicky about whether it would sell or not? What would you do if there were no offers on a home you had for sale?
Northwestern Mutual Donates $270,000 to Nonprofits Nationwide through its Community Service Awards Program Company recognizes its financial advisors’ unwavering dedication to volunteerism MILWAUKEE, Feb. 16, 2023 /PRNewswire/ — Celebrating the philanthropic work of its financial advisors, Northwestern Mutual is recognizing the individuals who have shown outstanding volunteerism and leadership through its 2023 Community Service Awards. … [Read more…]
It was a wild ride for the housing market last week! The 10-year yield rose noticeably, sending mortgage rates near 7% right in the heart of the spring selling season. New listings data fell, however, active inventory grew. And purchase apps had a weekly negative print, continuing the 2023 theme of higher rates impacting the data.
Here’s a quick rundown of the last week:
Total active listings grew by 3,809 weekly, but new listings are still trending at all-time lows.
Mortgage rates rose last week as we started the week at 6.55% but ended at 6.90%.
Purchase application data fell 4.8% weekly as the streak of higher rates impacting the weekly data continues.
Weekly housing inventory
They say slow and steady wins the race; well, for housing inventory in 2023, it’s been terribly slow this spring. How slow has the active listing growth been? Here is my crazy stat for the week: Last year at this time, the weekly active inventory grew by 25,542 in just one week. This year from the seasonal bottom, the total increase has only been 18,722.
Can anyone say savagely unhealthy? In my wildest dreams, I would have never thought this could happen being so close to June.
Weekly inventory change (May 12-19): Inventory rose from 420,381 to 424,190
Same week last year (May 13-20): Inventory rose from 312,857 to 338,399
The inventory bottom for 2022 was 240,194
The peak for 2023 so far is 472,680
For context, active listings for this week in 2015 were 1,108,932
According to Altos Research, new listing data fell last week, and the year-over-year decline is very noticeable as we have been trending at all-time lows all year. However, at this time last year, we saw some new listings growth versus 2021 levels. In the second half of 2022, mortgage rates spiked toward 7.37%, and new listings started to trend negative as some people gave up listing their homes with rates so high.
Here is the new listings data for this week over the last several years:
2023: 59,651
2022: 84,298
2021: 76,051
And here’s the new listing data for the same week in more normal years to give some historical perspective:
2017: 89,411
2016: 90,048
2015: 90,323
The NAR data goes back decades and illustrates how hard it’s been to get the total active listings back to the historical range of 2 million to 2.5 million. The latest existing home sales report, which I wrote about here, showed the year-over-year growth went from 1.03 million to 1.04 million.
NAR: Total inventory:
The 10-year yield and mortgage rates
A crazy week in the 10-year yield shot mortgage rates higher. We have a lot of drama talking points with the debt ceiling issue, but the jobless claims data had a good report, reversing the big negative number in the previous week.
When I talk about mortgage rates, it’s really about where I feel the 10-year yield will go for the year. In my 2023 forecast, I said that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating to 5.75% to 7.25% mortgage rates.
Now if the economy gets weaker, meaning the labor market sees a noticeable rise in jobless claims, then the 10-year yield should break under 3.21%, going all the way to 2.72%. This would take mortgage rates under 6%, and if the spreads return to normal, this could even get us below 5% mortgage rates again.
However, on that front, jobless claims did have a good week, as they fell which is a positive sign for the labor market, not a negative.
From the St. Louis Fed: “Initial claims for unemployment insurance benefits declined 22,000 to 242,000 in the week ended May 13, bringing the four-week moving average down to 244,250.”
Purchase application data
The housing market shifted significantly when mortgage rates peaked late year and started to fall. During that time, purchase applications had more positive than negative prints, stabilizing demand. As we can see below, our waterfall dive in purchase apps stopped as rates fell.
However, with that said, whenever rates rise, it impacts the weekly data negatively, and last week’s purchase apps were down 4.8%. With mortgage rates rising back near 7%, this week’s application data will likely be negative.
When mortgage rates rose from 5.99%-7.10% earlier in the year, we had three weeks of negative data. Then as rates fell, the data line got better — traditionally, total volume peaks in May, and seasonality kicks in for the rest of the year. I am keeping an eye out in the second half of 2023. If mortgage rates fall noticeably, we might have another surge in demand late in the year which we have seen in the previous three years.
The week ahead
We are getting closer and closer to some short-term resolution to the debt ceiling issue, but the wild ride might still get crazier this week. The debt ceiling issue is a wild card for market activity this week, with or without a resolution, so the focus would be put there until it’s finished or punted until September. The market will pay more attention to that than economic data this week.
However, we do have some key economic reports this week, including new home sales, pending home sales, and the personal consumption inflation data on Friday, which the Fed wants to get closer to 2%. The world likes to pay more attention to the CPI inflation data, but core PCE at 2% is the Fed’s target level.
The marketplace knows that the growth rate of inflation peaked last year, but it’s trying to time the economic expansion and when the next job-loss recession starts. This is why I stress following jobless claims weekly. We need to keep an eye on the 10-year yield because, due to the debt default fiasco, bond yields can have a chaotic week, which could quickly be reversed up or down.
This is why these weeks, when we have political factors, we must be careful in making statements about a long-term change in the data. Once this drama story ends, we can focus on real economic data.
Most mortgages carry a 30-year term, even if they’re adjustable for some period of those three long decades.
But in some cities, it’s reasonably possible to pay off your mortgage a lot earlier thanks to low home prices and decent wages.
Now, this isn’t to say you should pay your mortgage down aggressively…it’s just that you could, if you were so inclined.
Unsurprisingly, most of the cities in the top 10 list can be found in the central states, like Ohio, Michigan, and Missouri. But there are also spots in Pennsylvania and New York where home buyers can get free and clear in no time at all.
The Fast List
The data nerds over at Realtor came up with the list above by calculating median home prices in the top 50 markets in the U.S. and lining them up with the recommended 28% housing DTI ratio.
The result is a short 5.4 years to pay off a median priced home of $128,000 in Cleveland, Ohio. Sure, your football team won’t be very good, but at least you’ll have a football team.
And if you focus on tackling the mortgage, you’ll only have to pay taxes and insurance on your digs in little more than half a decade.
That’s certainly pretty cool if you’re not one to carry lots of debt. And you might get a decent water view on the “North Coast,” a term I’ve never heard until today.
You can pull off the same magic in cities like Rochester, NY, Pittsburgh, PA, and Buffalo, NY.
There are plenty of other major metros on the list as well, including the likes of St. Louis, Indianapolis, Cincinnati (hard to spell, but decent football), and Kansas City (great baseball).
In Indy, some 71% of the homes are affordable to prospective home buyers, and St. Louis was deemed a top 10 up-and-comer by Realtor.com thanks to strong projected home sales and future home price appreciation.
So if you don’t want to worry about the mortgage for more than a handful of years, as opposed to into your old age, check out those cities. You may even be able to take out a 15-year or 10-year fixed mortgage at the outset to save a ton in interest and grab a lower mortgage interest rate.
Conversely, if you want to keep your mortgage forever, look at these 10 superstars.
The Slow List
In Los Angeles, it will actually take you nearly the full 30-year term to pay off your mortgage. The annual income of around $100,000 in the 90210 requires a lengthy 29.4-year amortization period.
So no 15-year fixed for you unless you’re making big bucks. You’ll need a 30-year mortgage.
The same goes for much of the Bay Area, including San Jose and San Francisco, and in sunny San Diego. That explains why lenders are increasingly offering zero down mortgage options like the POPPYLOAN.
Hot cities such as Denver are starting to get a hair expensive too seeing that it’ll take the average buyer 21.3 years to pay off the mortgage without breaking the bank or raiding the retirement nest egg.
It’s a little bit better in places like Miami and Portland, but these cities are clearly getting more expensive as homeowners from nearby states (and countries) flock to affordability.
However, there are still some relative bargains to be had in places like Sacramento, California and Austin, Texas where it can take less than 15 years to get mortgage-free while still saving for retirement and living comfortably.