Portland Mortgage Market Update — February 16, 2024

CPI, PPI, My oh my. The Consumer Price Index and Producer Price Index reports were released this week and the results were... not great. In a nutshell they both showed stronger inflation than anticipated and it wreaked havoc on mortgage rates. If inflation is showing to be stickier than anticipated, it means the Fed will be less likely to lower their interest rate and mortgage rates will stay higher until inflation comes down. So the market, which had previously been betting on 5 rate cuts this year is now estimating 3 rate cuts as a result, with the first not coming until June.

Fannie and Freddie released a new home buyer grant this week! In an effort to help spur homeownership among "very low income" borrowers, the two Government Sponsored Entities began offering a $2,500 credit to help offset buyers down payment and closing costs. While any action to help lower the barrier to home ownership is great, I don't think there is any way this gets utilized in our market. For one, it is only available to borrowers earning less than 50% of the area's Adjusted Median Income. For most of the Portland/Metro Area the AMI is $114K which means the total household income needs to be below $57K, or $4750/mo. To keep Debt-To-Income ratios in check, the housing expense can't be more than 45-50% of that, so we are looking at an absolute max monthly payment of $2,375/mo assuming the borrower doesn't have any other debts. That backs out to around a $275K loan amount (or a $283,500 sales price with minimum down), and I can't remember I saw something priced that low in our area that would qualify for financing. Basically, the intentions are good here, but it feels more like Fannie and Freddie are patting themselves on the back rather than doing anything that actually works.

CALL TO ACTION!! I am working on a presentation all about how NOW is the time to buy! Between the pinch in inventory, buyers sitting out on today's market due to high interest rates and the increasing population of renters "aging" into becoming first time homebuyers all signs are pointing to housing getting more and more expensive in the years to come. If you have any interest in educating potential homebuyers about how much waiting may cost them, please reach out and I would be happy to present to your realtor group or we can set up a homebuyer's class.