Portland Mortgage Market Update — February 9, 2024

Rates struggled early in the week but eventually gained their footing for a quiet end of the week. If you recall, late last week they were rocked by Chairman Powell's post Fed-meeting notes that he doesn't think they will cut rates in March. Then he doubled down by going on 60 minutes over the weekend and reiterated the sentiment that they may need to keep rates higher until they see a weakening economy. For the past couple of months the Fed has been pointing to the labor market as propping up this strong economy, but a report released today indicates that may come to an end…

What's this about the labor market? Well, anecdotally I think everyone can see that the job market is not as strong as the numbers indicate. Between local layoffs at Nike and Intel, and broader layoffs like Wells Fargo I think we all know someone who has been impacted by the weakening job market and companies tightening their belts. Today a CEO Confidence Survey was released and while the overall index rose 7% due to moderating inflation, 23% of CEOs expected to lay off workers in the next 12 months (up from 13% in the previous quarter) and only 35% of the CEOs expected to expand their workforce over the next 12 months (down from 38%). We will see if/when this actually trickles down to the BLS jobs reports in the near future.

IMPORTANT INFORMATION FOR POTENTIAL BUYERS: Yesterday Fannie Mae released their Home Purchase Sentiment Index where the survey potential home buyers. In it, 83% of potential home buyers indicated right now is NOT a good time to buy, mainly due to the fact that rates are likely to improve later in the year. So only 17% of market is actively shopping right now. Do you think a buyer will get a better deal on a house when they are competing against the 17% that is active now, or when there is literally 5x more competition out there driving up housing prices. We know there isn't going to magically be a flood of inventory hitting the market, so bidding wars are going to come back on the menu. We need to educate our clients that they will not get a better deal on house than right now, and we will take care of the rate piece later on.

Next week brings the CPI report which should show some improvements and will hopefully drive rates back down. If you have any questions about any of this, feel free to call me anytime this weekend. Take care!