PMorgan CEO Foresees Post-Pandemic Boom

By Jessica Menton

JPMorgan Chase CEO Jamie Dimon calls robust consumer savings and a $2T infrastructure plan the economic “Goldilocks scenario” for fast and sustained growth into 2023.

NEW YORK – JPMorgan Chase CEO Jamie Dimon said the U.S. economy is headed for a boom that could run well into 2023.

In his annual letter to shareholders Wednesday, Dimon said robust consumer savings, a successful vaccine rollout and the Biden administration’s proposed $2 trillion infrastructure plan could lead to an economic “Goldilocks scenario” of fast and sustained growth, tame inflation and a measured rise in interest rates.

“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE (quantitative easing), a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon said. “This boom could easily run into 2023 because all the spending could extend well into 2023.”

In his 65-page letter, Dimon said the long-term effects of the economic boom won’t be known for years because it will likely take time to see how government spending, including President Joe Biden’s proposed $2 trillion infrastructure bill, will boost economic growth.

The infrastructure plan, dubbed the American Jobs Plan, aims to rebuild the nation’s aging roads, bridges, transit and rail service, along with supporting electric vehicles, clean energy and building more than 2 million affordable homes. The White House said it would like to see the plan approved by Congress in the summer.

“The permanent effect of this boom will be fully known only when we see the quality, effectiveness and sustainability of the infrastructure and other government investments,” Dimon added. “I hope there is extraordinary discipline on how all of this money is spent. Spent wisely, it will create more economic opportunity for everyone.”

To be sure, a number of challenges could thwart the boom, Dimon said, including the risk of new COVID-19 variants and rising debt levels. A faster-than-expected rise in inflation could also lead the Federal Reserve to raise interest rates more quickly than Wall Street is expecting, which would threaten to weigh on economic growth.

Copyright 2021, USATODAY.com, USA TODAY

Lenders Are Tightening Up on Mortgage Loans

MBA: Mortgage credit availability has hit its lowest level since 2014. In 4Q 2020, the median credit score for approved mortgages was 786.

NEW YORK – Beware: Your buyers could struggle to be approved for a home loan. As lenders tighten standards, home loan approval is becoming more difficult, The Wall Street Journal reports.

The Mortgage Bankers Association reports that mortgage credit availability, which measures lenders’ willingness to approve mortgages, is at its lowest level since 2014.

“Because mortgage credit is more difficult to obtain, it is a more competitive environment overall,” says Lawrence Yun, chief economist at the National Association of Realtors®.

Mortgage lenders are issuing more home loans at record levels, but those mortgages most often go to those with stellar credit histories and borrowers willing to make large down payments. About 70% of mortgages granted in 2020 went to borrowers with credit scores of at least 760. That’s up from 61% in 2019, according to data from the Federal Reserve Bank of New York. Among borrowers with approved mortgages, the median credit score was 786 in the fourth quarter of 2020.

Lenders are being cautious issuing loans as the housing market surges from strong homebuyer demand and higher home prices. Mortgage loan availability plunged about 35% annually in 2020. Lenders hope to protect themselves from making loans to borrowers who might lose their jobs amid the pandemic.

Forbearance is another fear of lenders. To receive approval for a mortgage, some borrowers are reportedly asked to sign statements saying they have no intention of requesting forbearance after they’re approved for a mortgage.

As The Wall Street Journal reports: “The meteoric growth of home prices has made some lenders reluctant to take on first-time home buyers or others they view as slightly risky. Lenders who were comfortable offering mortgages of $300,000 or $320,000 to borrowers with good-but-not-great credit histories might not be willing to lend the $350,000 or more now required to buy the same property.”

Mortgage lenders weigh multiple variables in approving applications, including the borrower’s employment history, income, credit score and debt level.

Rejected mortgage applicants may find better luck soon, however. Credit requirements likely will loosen slightly this year as mortgage rates rise and prompt a decline in lenders’ bustling refinance business, Mike Fratantoni, the MBA’s chief economist, says. “Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first-time buyers for purchases.”

Source: “Need a Mortgage Loan? Good Luck. Lenders Are Tightening Standards,” The Wall Street Journal (April 2, 2021)

© Copyright 2021 INFORMATION, INC. Bethesda, MD (301) 215-4688

Mortgage Rates Dip – First Time Since January

The 30-year mortgage rate dropped to 3.13% this week from 3.18% last week; it was 3.33% a year ago. High prices and limited supplies continue to impact buyers.

McLEAN, Va. (AP) – Mortgage rates fell for the first time in more than two months as buyers continue to be stifled by high prices and limited supply.

Mortgage buyer Freddie Mac reported Thursday that the benchmark 30-year loan rate dipped to 3.13% this week from 3.18% last week. At this time last year, the long-term rate was 3.33%.

The rate for a 15-year loan, popular among those looking to refinance, fell to 2.42% from 2.45% last week. One year ago it was 2.77%.

Mortgage rates have been historically low for years, but strong demand and low inventory have pushed prices higher.

Last week the National Association of Realtors® reported that its index of pending home sales tumbled 10.6% to 110.3 in February, its lowest level since May of 2020. Contract signings are now slightly behind where they were last year after eight straight months of year-over-year gains.

Meanwhile, U.S. home prices rose at the fastest pace in seven years in January, according to the S&P CoreLogic Case-Shiller 20-city home price index. The pandemic has fueled demand for single-family homes as people look for more space.

Economists expect home loan rates to remain low as the Federal Reserve says it intends to keep its main borrowing rate near zero until the economy recovers from the coronavirus pandemic.

Also Thursday, the Labor Department reported that the number of Americans applying for unemployment benefits rose last week to 744,000, signaling that many employers are still cutting jobs even as more people are vaccinated against COVID-19 and state and local governments lift virus restrictions.

Copyright © Associated Press (AP). All rights reserved.

MLS Data Trends

Enough data has been collected to start seeing the trends visually. Current inventory of 37.80 days. Click the link to see the trends.

Daily MLS

611 Residential Listings

1,234 Under Contract/Pending

1,574 Sold in 2021

Absorption Rate 16.22

37.67 Days of inventory

Click lick to see chart: https://docs.google.com/spreadsheets/d/e/2PACX-1vS8FiByc8pS9Wl6taRUqD7sG8cGhcQIEZN1NnzBIcRj5DK3QnqUKhLAQ9x_2n6xZ25uMEtMRX3Tpbgh/pubchart?oid=329629950&format=interactive

Florida Realtors Issues Housing Trust Fund Call for Action

Help make Realtors’ voice in Tallahassee a little louder: Email lawmakers. Ask them not to permanently cut 66% of the housing trust funds many hard-working Floridians need.

ORLANDO, Fla. – On Monday, Florida Realtors® President Cheryl Lambert issued a Call for Action – a legislative tool that asks and encourages all members of Florida Realtors to contact their lawmakers in Tallahassee.

The process takes only seconds using Florida Realtors’ votervoice.net system.

“In 1992, Realtors® in Florida agreed to tax their own business with a new documentary stamp tax that would be used to help residents attain affordable housing,” Lambert wrote in an email to all Florida Realtors members. “Since then, hundreds of thousands of Floridians – many of them teachers, firefighters, first responders and other essential workers – have utilized these funds to help purchase a home, beginning their journey of financial wellness.

The trust funds – commonly called the Sadowski trust funds – have not always gone toward affordable housing programs, notably in lean budget years when the Florida Legislature would “sweep” money into general revenue and use it for other purposes. However, the latest proposal would be a permanent reduction by two-thirds, at a time when the state is already struggling with affordable housing issues.

“Affordable housing is a priority for Florida’s essential workers,” Lambert says. “It is a priority for the elderly on fixed incomes. And it is a priority for hard-working Floridians looking to purchase their first home. Now is not the time to take money away from programs that can help Floridians achieve the American dream of homeownership.”

While Realtors are encouraged to contact their personal representatives – which the email system does for them automatically – anyone can join the movement and help keep homeownership affordable.

“Help support affordable housing by telling our lawmakers to use the housing trust funds for housing!” Lambert says.

© 2021 Florida Realtors®

As of the time of writing this the MLS of Indian River County has 616 residential listings, 1,248 under contract/pending, 1,537 sold for the 96 days of the year giving us a daily absorption rate of 16. With these numbers we have 38.5 days of inventory.

Click to see tracking graph: https://docs.google.com/spreadsheets/d/e/2PACX-1vS8FiByc8pS9Wl6taRUqD7sG8cGhcQIEZN1NnzBIcRj5DK3QnqUKhLAQ9x_2n6xZ25uMEtMRX3Tpbgh/pubchart?oid=329629950&format=interactive

Daily MLS (Economics 101)

I’ve been tracking the MLS stats for Indian River County Florida for two weeks to watch the supply and demand. Each day at the same time I check the MLS for Residential current listings, under contract/pending, and sold for the year. I use those numbers to give me the daily absorption rate and the days left for supply.

This morning we have 622 listing, 1,238 under contract/pending, and 1,522 sold for the year resulting in an daily absorption rate of 16. That gives us 38 days of inventory.

It’s getting harder and harder to find buyers property.

Chart: https://docs.google.com/spreadsheets/d/e/2PACX-1vS8FiByc8pS9Wl6taRUqD7sG8cGhcQIEZN1NnzBIcRj5DK3QnqUKhLAQ9x_2n6xZ25uMEtMRX3Tpbgh/pubchart?oid=329629950&format=interactive