Tag: Real Estate/Property

Home buyers thought mortgage rates were finally going to go down. Why hasn’t it happened yet?

[ad_1]

Why are mortgage rates still so high?

After a year of mortgage rates near 8%, home buyers are eager for good news. Some forecasters have buoyed their hopes, estimating that the rate on the 30-year mortgage will drop to 6% or lower this year.

But rates have not fallen by much thus far. The 30-year rate is currently averaging 6.64%, according to Freddie Mac. That’s despite the fact that the U.S. Federal Reserve hasn’t raised its benchmark interest rate since July 2023 and signaled in December that it would cut that rate in 2024. Meanwhile, economists in the real-estate sector have been anticipating a drop in mortgage rates since last fall.

“Homebuyers may be feeling like the lower mortgage rates they’ve been promised in 2024 are not materializing,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. In a recent survey of Americans’ feelings about the housing market, 36% of respondents said they expect mortgage rates to fall in the next 12 months.

While the Fed doesn’t set mortgage rates, it can influence them, just as it influences the overall U.S. economy through monetary policy. But even though the central bank has hit the brakes on tightening monetary policy, with the economy giving off mixed signals of strength and weakness, the timing of anticipated cuts to the benchmark rate remains unclear.

That in turn creates uncertainty about when mortgage rates will drop enough to “unfreeze” the housing market. Home buyers are probably going to have to wait until the Fed acts definitively before they see those lower rates.

The effect of a strong economy

The strength of the U.S. economy is one reason mortgage rates have not yet fallen much, economists say. The job market is still hot, and inflation remains higher than the Fed’s goal, which is why the latest read on inflation, out Feb. 13, will be so closely watched. The fact that rates haven’t fallen this year is “a result of uncertainty about the economy and the timing of the Fed’s rate cuts,” Sturtevant said.

“The strong job market is good news for the spring buying season, as higher household incomes are a necessary component, but it also means that mortgage rates are not likely to drop much further at this point,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told MarketWatch.

Another reason mortgage rates are still high is that lenders are trying to protect themselves against lower rates in the future, Cris deRitis, deputy chief economist at Moody’s Analytics, told MarketWatch. If rates fall, lenders run the risk that a borrower will pay off a loan early by refinancing. That would limit how much in interest that lender could expect to make.

“In an odd sort of way, then, the expectation that mortgage rates will be lower in the future can lead lenders to increase rates today to compensate for the prepayment risk,” deRitis said.

Lower rates, more competition among buyers

So when can prospective buyers expect mortgage rates to fall significantly?

“Homebuyers should expect mortgage rates to move lower as we head through 2024,” Sturtevant said. While Fannie Mae expects rates to fall below 6% by the end of the year, other economists, like Fratantoni, expect the 30-year rate to finish the last quarter of 2024 at 6.1%.

But even if rates do fall, that won’t necessarily mean buyers will be better able to afford a home, because a drop in rates could heat up competition for homes even as it boosts buyers’ purchasing power.

“There is still very low inventory in the market, and buyers need to act quickly when they find the right home for them,” Sturtevant said.

For the many homeowners who currently have a mortgage rate below 4%, rates stuck in the 6% range may be leading them to put off plans to sell their home and buy a new one.

But it’s worth noting that since 2000, rates on 30-year mortgages have ranged from a high of about 8.62% to a low of 2.81%, averaging about 5% over that span. And compared with the historical average of the 1970s, which was 7.7%, the current rates in the 6% rage are not that high, deRitis noted.

[ad_2]

Source link

February 12, 2024
This New Jersey financial pro just won nearly $500K on a sports bet. He'll use it to pay off student loans.

[ad_1]

After winning nearly $500,000 on a $5 sports bet, a New Jersey financial adviser said he is planning to follow some of the advice he gives to clients and put the money to good use.

Travis Dufner, a 32-year-old adviser with Millstone Financial Group in Millstone, N.J., is the bettor who has stepped forward to say he won the $489,378.01 parlay payoff. The wager involved picking 14 players who would score a touchdown over the holiday weekend’s NFL games.

When…

Master your money.

Subscribe to MarketWatch.

Get this article and all of MarketWatch.

Access from any device. Anywhere. Anytime.

Subscribe Now

Already a subscriber?

Log In

[ad_2]

Source link

December 26, 2023

Here’s why you might not have to pay a 6% commission next time you sell a home

[ad_1]

Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
SCHW,
+1.64%,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.

But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.

Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:

Real-estate advice from the Moneyist

MarketWatch illustration

Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:

Economic outlook

On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.

Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.

Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools

Bond-market trend switches again

The U.S. Treasury yield curve has been inverted for nearly a year.

FactSet

Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes
BX:TMUBMUSD10Y.

There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.

As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.

In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.

In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.

For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.

Ford’s good news — in the bond market

Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.

Getty Images

Ford Motor Co.’s
F,
+4.14%
credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.

A stock-market warning based on history

The original Magnificent Seven.

Courtesy Everett Collection

By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
SPX
: Apple Inc.
AAPL,
-0.52%,
Microsoft Corp.
MSFT,
+1.29%,
Amazon.com Inc.
AMZN,
+0.38%,
Nvidia Corp.
NVDA,
+3.45%,
Alphabet Inc.
GOOGL,
+1.26%

GOOG,
+1.39%,
Meta Platforms Inc.
META,
+1.20%
and Tesla Inc.
TSLA,
+0.66%.
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:

Company	Ticker	% of SPY portfolio	2023 total return	2022 total return	Total return since end of 2021
Apple Inc.	AAPL, -0.52%	7.2%	37%	-26%	1%
Microsoft Corp.	MSFT, +1.29%	7.1%	46%	-28%	5%
Amazon.com Inc.	AMZN, +0.38%	3.5%	64%	-50%	-17%
Nvidia Corp.	NVDA, +3.45%	3.0%	198%	-50%	48%
Alphabet Inc. Class A	GOOGL, +1.26%	2.1%	44%	-39%	-12%
Meta Platforms Inc. Class A	META, +1.20%	1.9%	158%	-64%	-8%
Alphabet Inc. Class C	GOOG, +1.39%	1.8%	45%	-39%	-11%
Berkshire Hathaway Inc. Class B	BRK.B, +0.80%	1.8%	13%	3%	17%
Tesla Inc.	TSLA, +0.66%	1.7%	77%	-65%	-38%
UnitedHealth Group Inc.	UNH, -0.98%	1.4%	2%	7%	9%
Eli Lilly and Company	LLY, -2.15%	1.3%	60%	34%	115%
Sources: FactSet, State Street (for SPY holdings)

Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.

Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.

A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.

The MarketWatch 50

The MarketWatch 50 series is back, with articles and video interviews starting this week, including:

PayPal soars after earnings report

PayPal CEO Alex Chriss.

MarketWatch/PayPal

After the market close on Wednesday, PayPal Holdings Inc.
PYPL,
+1.89%
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.

In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.

A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook

Consumers drive mixed reactions to earnings results

Apple Inc. reported mixed quarterly results.

Mario Tama/Getty Images

Here’s more of the latest corporate financial results and reactions. First the good news:

And now the news that may not be so good:

Harsh verdict for SBF

It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.

Here’s more reaction and coverage of the virtual-currency industry:

Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

[ad_2]

Source link

November 3, 2023

These are the most expensive ZIP Codes in the U.S. for house shoppers
[ad_1]
Where are home buyers paying the most? Mostly on the coasts, according to a new report.

Based on a ZIP Code–level analysis of closed home-sale prices, PropertyShark, a real-estate data site owned by Yardi Systems, found that, of the top 100 most expensive ZIP Codes in the U.S., 65% were in California.
On the East Coast, New York City had the highest concentration of pricey postal codes for home buyers, the report said.

The analysis of ZIP Codes was based on the actual sale prices of homes, not their asking prices, PropertyShark noted. “Whereas asking prices reflect sellers’ wishes, calculating medians based on sale prices reflects the transactional reality on the ground,” PropertyShark said.

The most expensive ZIP Code in the U.S., 94027, in Atherton, Calif., has been a longtime leader on the list, the report said. The median sale price of a home there was a cool $8.3 million. The Bay Area town, in San Mateo County, is home to some rich and famous people, including NBA star Steph Curry and his wife, Ayesha; tech billionaire Marc Andreessen and his wife, Laura; and others.

Curry and Andreessen have opposed denser and more affordable housing developments in their neighborhoods, earning them criticism as “NIMBYs,” for Not In My Backyard. “Atherton is almost exclusively zoned for single-family homes, with a one-acre minimum lot requirement dating back to the 1920s,” the PropertyShark report stated.

Across the country, New York City had the highest density of expensive ZIP Codes, with eight spread across Manhattan, Brooklyn and Queens.

The Hamptons town of Sagaponack (11962), a Long Island enclave popular with celebrities, ranked No. 2 on the list, with a median home price of $8,075,000.

Nationally, the median home price, meaning the price in the exact middle of the price range, was $394,400 as of September, according to the National Association of Realtors.

These are the most expensive ZIP Codes in America as of 2023, according to PropertyShark:

Atherton, Calif. (94027)

Median home-sale price in 2023: $8,300,000

Sagaponack, N.Y. (11962)

Median home-sale price in 2023: $8,075,000

Miami Beach, Fla. (33109)

Median home-sale price in 2023: $5,500,000

Santa Barbara, Calif. (93108)

Median home-sale price in 2023: $5,000,000

Beverly Hills, Calif. (90210)

Median home-sale price in 2023: $4,800,000

Stinson Beach, Calif. (94970)

Median home-sale price in 2023: $4,500,000 (tie)

Water Mill, N.Y. (11976)

Median home-sale price in 2023: $4,500,000 (tie)

Newport Beach, Calif. (92661)

Median home-sale price in 2023: $4,495,000

Santa Monica, Calif. (90402)

Median home-sale price in 2023: $4,489,000

Medina, Wash. (98039)

Median home-sale price in 2023: $4,388,000

Rancho Santa Fe, Calif. (92067)

Median home-sale price in 2023: $4,248,000

Read on: This U.S. city has the highest share of superrich residents in the world — and it’s not New York, San Francisco or Seattle
[ad_2]

Source link
November 3, 2023
Here’s how much money you need to buy a $400,000 home with 8% mortgage rates

[ad_1]

U.S. home buyers face a tough real-estate market, with the 30-year mortgage near 8%.

Exactly how tough is it to buy a house these days? MarketWatch worked with Redfin to find out how much a home buyer needs to earn to buy a median-priced house in September 2023 with the 30-year fixed-rate mortgage at 8%.

It’s not a pretty picture. Mortgage rates have more than doubled since the pandemic, when the U.S. Federal Reserve kept interest rates low to promote economic activity amid mass closures to prevent the spread of the coronavirus.

The Fed’s aggressive and quick hiking of rates since then has made it much more expensive to buy a house, particularly with a mortgage. Higher rates have also spooked homeowners who might have been considering a move, which in turn has resulted in very low inventory and pushed up home prices. Even all-cash buyers cannot catch a break in this environment, because there are few listings.

A median-priced home, meaning a house right in the middle of the price ladder, was roughly $412,000 in September 2023, according to real-estate brokerage Redfin
RDFN,
-2.33%.
The 30-year rate varied between 7.63% according to Freddie Mac and 8.03% according to Mortgage News Daily.

“It’s important to note that reported rate numbers are averages at best and don’t apply across the board,” Andy Walden, vice president of enterprise research at Intercontinental Exchange, said.

“Actual offerings will vary by lender and are dependent on the loan type and creditworthiness of the individual borrower,” he added.

With that in mind, here’s a look at exactly how various mortgage rates affect your monthly housing payment.

Buying a median-priced home at 8% rates

Mortgage News Daily on October 19 noted that some lenders were quoting a rate of 8.03%.

That means that if a home buyer is paying for a median-priced $412,000 home with a 30-year mortgage at 8% after putting 20% down, they would have to pay roughly $3,019 per month, which includes not just their principal and interest, but taxes and insurance as well, according to Redfin.

To afford that on a monthly basis, a prospective buyer would need to make $120,773. Redfin considers a monthly payment as “affordable” if the buyer is spending no more than 30% of their income on housing.

Buying a median-priced home at 7% rates

In October, Fannie Mae said that it expected the 30-year mortgage to fall to 7.1% in the first quarter of 2024, and go lower after that, ending the year at 6.7%.

If a home buyer is paying for the $412,000 home with a 30-year mortgage at 7% after putting 20% down, they would have to pay roughly $2,794 per month, which includes not just their principal and interest, but taxes and insurance as well, Redfin said.

To afford that on a monthly basis, a prospective buyer would need to make at least $111,747 a year.

Buying a median-priced home at 6% rates

The Mortgage Bankers Association, an industry group, expects the 30-year to fall to 6.1% by the end of 2024.

If a home buyer is paying for the $412,000 home with a 30-year mortgage at 6% after putting 20% down, they would have to pay roughly $2,577 per month, which includes not just their principal, interest, taxes, and insurance, Redfin said.

To afford that on a monthly basis, a prospective buyer would need to make at least $103,078 a year.

Real-estate is much more expensive today than before the pandemic

Rising rates have made buying a home a much more expensive process than before the coronavirus pandemic.

A home buyer buying a median-priced home today has to earn 50% more than they would have if they wanted to buy a median-priced home at the start of the pandemic, Redfin said in a blog post.

“Buyers — particularly first-timers — who are committed to getting into a home now should think outside the box,” Chen Zhao, economics research lead at Redfin, said in the post.

“Consider a condo or townhouse, which are less expensive than a single-family home, and/or consider moving to a more affordable part of the country, or a more affordable suburb,” she added.

[ad_2]

Source link

October 27, 2023
U.S. pending home sales stay near record low despite modest pickup in September

[ad_1]

The numbers: U.S. pending home sales rebounded in September but remain near a record low as high mortgage rates and low inventory continue to hurt the real-estate sector.

Pending home sales rose 1.1% in September from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

But pending home sales were still depressed on an annual basis due to the dearth of home listings. The September figure was the second-lowest reading since the NAR began tracking the data in 2001.

Transactions were down 11% from last year.

Nonetheless, the sales pace exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 1.5% in September.

Pending home sales reflect transactions where the contract has been signed for the sale of an existing home, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

The NAR also released an updated forecast for existing-home sales on Thursday. The group expects sales to fall 17.5% in 2023 to a pace of 4.15 million, which will be the slowest pace since 2008. Yet due to low inventory, the median home price will increase by 0.1% in 2023, the NAR said, to $386,700.

The group expects home sales to rebound in 2024, rising 13.5% to a rate of 4.71 million. Home prices are expected to rise 0.7% next year, to $389,500.

The NAR also expects the 30-year mortgage rate to fall to 6.9% in 2023 and 6.3% in 2024. The 30-year was averaging 7.98% as of Wednesday, according to Mortgage News Daily.

Big picture: The U.S. housing market is dealing with problems on both the demand and supply sides, but the NAR seems confident that the sector will recover in the new year.

At present, not only are rates high enough to discourage home buyers, the lack of inventory is also making homes more expensive, which further spooks buyers. The NAR expects the pace of existing-home sales to fall to the slowest in 15 years, when the U.S. was in the midst of a recession caused by the subprime-lending crisis.

What the realtors said: “Because of home builders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” NAR Chief Economist Lawrence Yun said. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”

Market reaction: Stocks
DJIA

SPX
were mixed in early trading on Thursday. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
rose above 4.9%.

[ad_2]

Source link

October 26, 2023
Paid off your mortgage? Be careful — you’re at risk of title theft.

[ad_1]

Homeowners may be thrilled when they finally pay off their mortgage, but the accomplishment comes with risks.

Retirement Tip of the Week: Be vigilant in protecting your identity and assets, and be aware of how you could fall victim to various scams or theft associated with your home.

With title theft, thieves transfer a house deed from the rightful owner to another person’s name by using the owner’s personal information. Title theft could also take the form of using equity in a home, such as by opening a home equity line of credit, known as a HELOC, according to Quicken Loans. When a house is unoccupied, thieves could go so far as to sell or rent out the property.

Title theft isn’t particularly common, but it does happen, and it’s another reason people should protect their identity and other sensitive information. Older Americans could be at higher risk, especially if they have a lot of equity in their home. About 11,500 people reported losing more than $350 million to real-estate scams in 2021, although that figure includes fraud pertaining to real-estate advertisements and rental agreements, according to the FBI.

Homeowners should keep on top of their documents and may even want to occasionally confirm their information with their county deeds office, the FBI said. Any mail from a mortgage lender should be checked to make sure it doesn’t pertain to your specific property.

If you are a victim of title theft, open an identity-theft case with the Federal Trade Commission, alert creditors about the fraud and look over your title insurance, which protects homeowners’ rights and which mortgage companies often require home buyers to have, Quicken Loans said.

There are companies that offer title-protection services, although critics say it’s not the same as title insurance and only alerts a homeowner of a problem after it has occurred.

“Do you need this service to protect your home from property thieves? The answer is no,” the Maryland Attorney General’s office said in a consumer alert about title-protection services. “Title fraud is very rare, and hardly ever successful. If someone ever tries to transfer your deed without your permission or knowledge, like these title lock companies suggest could happen, the transfer is fraudulent and void from the outset.”

Instead, homeowners should monitor their identity and keep an eye on their credit scores, the office said.

[ad_2]

Source link

September 15, 2023
China Rolls Out New Mortgage Rules to Boost Home Sales, Xinhua Says
[ad_1]
Chinese regulators eased the nation’s mortgage requirements to let more home buyers enjoy favorable mortgage conditions that were previously limited to first-time home purchasers, the state-run Xinhua News Agency said on Friday.

China’s central bank, the Ministry of Housing and Urban-Rural Development and the National Financial Regulatory Administration jointly eased the requirements for home buyers who have already purchased homes to boost property sales as the real-estate slump continued, according to Xinhua.
Home buyers who don’t have family members with houses registered under their names can enjoy favorable terms that were previously limited to people buying their first homes, according to Xinhua.

First-home buyers are normally given cheaper mortgage rates than other buyers who have at least one apartment. First-home buyers are also required to make smaller down payments, as low as 20% of the total property value.

Write to Singapore editors at singaporeeditors@dowjones.com
[ad_2]

Source link
August 24, 2023
Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

[ad_1]

The numbers: Mortgage rates rose for the fourth week in a row to the highest level since 2000, as the economy continues to show strength.

Rates surged as the U.S. economy continued to show signs of resilience, which signal to the market that the U.S. Federal Reserve may not be done with rate increases.

The 30-year was averaging at 7.31%, which in part dampened demand for home-purchase mortgages to the lowest level since April 1995.

Demand for both purchases and refinancing fell. That overall pushed down the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (M.B.A.) said on Wednesday.

The market index fell 4.2% to 184.8 for the week that ended Aug. 18, relative to a week earlier. A year ago, the index stood at 270.1.

Key details: High mortgage rates are weighing on home buyers’ budgets due to an increase in borrowing costs. Many buyers fled the market as a result of rates rising over the last week. The purchase index, which measures mortgage applications for the purchase of a home, fell 5% from last week.

Rates hold little allure for homeowners hoping to refinance. The refinance index fell 2.8%.

Rates rose across the board.

The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 7.31% for the week ending August 18. That’s up from 7.16% the week before, the M.B.A. said. The 30-year is at the highest level since December 2000.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 7.27%, up from 7.11% the previous week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration rose to 7.09% from 6.93%.

The 15-year rose to 6.72%, up from last week’s 6.57%.

The rate for adjustable-rate mortgages rose to 6.5% from last week’s 6.2%. The share of adjustable-rate mortgages rose to 7.6%, the highest level in five months.

The big picture: The housing market continues to be hammered by good economic news, which is pushing rates up and depressing home sales. Higher rates also discourage homeowners from selling, as their purchasing power erodes when they look for homes to buy.

As a result, both home-buying demand and supply of home listings continues to fall, bringing the market to a standstill. Until the economy shows signs of slowing, it’s likely that the housing market will remain in the doldrums.

What the M.B.A. said: “Applications for home purchase mortgages dropped to their lowest level since April 1995, as home buyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Joel Kan, deputy chief economist and vice president at the M.B.A., said in a statement.

Kan added that there was an uptick in people using adjustable-rate mortgages. “Some home buyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period,” he said.

Market reaction: The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was above 4.3% in early morning trading Wednesday.

[ad_2]

Source link

August 23, 2023
Buying a Home Is Getting Out of Reach. Those 7% Mortgage Rates Are the Reason Why.

[ad_1]

Buying a Home Is Getting Out of Reach. How Much 7% Mortgage Rates Need to Fall.

[ad_2]

Source link

August 19, 2023
Housing market has hit ‘rock bottom,’ says Redfin CEO Glenn Kelman

[ad_1]

Housing market has hit ‘rock bottom,’ says Redfin CEO

[ad_2]

Source link

August 16, 2023
I’m a New Yorker. My wife wants to buy a $700,000 co-op. What could go wrong?

[ad_1]

I’ve lived in the city for the last four decades, but I’ve mostly been renting. My priorities are a three-bedroom apartment with easy access to grocery stores and the subway in a nice, quiet neighborhood.

But housing prices are insane in New York City. I want a house, but my partner is looking at a co-op. And for my price range of $700,000, the best options I can find are co-ops.

I plan to buy the home and live in it, and am not looking to rent it out in the foreseeable future. The home is for my family of four.

So my question is this: Is a co-op a good idea?

New York Native

‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.

Dear New Yorker,

For those unfamiliar with what a co-op is, it’s short for housing cooperative. A cooperative is a legal group that owns one or more residential buildings, and the residents are members of it. The cooperative can comprise apartments, but it can also be made up of single-family homes. Residents who purchase a co-op unit don’t own the unit itself and have a share in the common areas. Instead, they’re purchasing a share of the overall property, and that share gives them the right to live in a specific unit.

When you look for homes, you may find that co-operative apartments are cheaper than comparable condominium units in the same city, or than single-family homes. And with the median home price in Manhattan being $1.2 million, according to Douglas Elliman, a co-op apartment for $700,000, if you find one, may sound like a good deal.

But, as you already know, for a three-bedroom, you’ll be quickly priced out of Manhattan. The real-estate brokerage said that a three-bedroom co-op apartment on the island would run about $2.23 million. And only 12% of co-op sales were three-bedroom apartments, versus 38% for one-bedrooms.

You will find deals further out. In Queens, Douglas Elliman said, the median price of a condo unit was about $720,000 in the second quarter of this year, and a co-op apartment cost roughly $310,000.

But there are drawbacks that you should consider, if you haven’t already.

First of all, you don’t technically own your co-op apartment as you would own an apartment in a condominium. Co-ops also charge you fees, which can run $4,000 a month, as Streeteasy observes, depending on the size of the unit, and so on. Applying for co-op ownership can be a painful process. Renting them out (if you can do that at all) will be hard, since the renter will have to go through the co-op board.

Selling is similarly tough, as the prospective buyer needs to be approved by the board. A board can require that a buyer put a lot of money up front, as Curbed explains. Ultimately, you may end up with less equity over time as experts say co-ops don’t typically appreciate at the same pace as condominium units or single-family houses or town houses.

Co-ops are also very “secretive,” as the Guardian put it, with little transparency into how boards make their decisions about potential buyers and renters. According to data from the New York City Department of Housing Preservation and Development, there were 3.6 million housing units as of 2021, out of which 832,000 were in a condominium or a co-op.

That being said, co-ops aren’t all that bad.

The important thing to remember is if you’re just looking for an affordable place to live with your family, the numbers may very well make sense.

Co-op apartments are priced lower than units in condominiums, as already mentioned, so you’re still able to find good options with easy access to the subway and other urban amenities. You can stop dealing with rent hikes from your landlord and have a property to call your own. And, ultimately, you also live in a building with many long-term tenants versus living among neighbors who change every year. There can also be a greater sense of community in a co-op vs. a condominium as co-op residents may tend to change less frequently.

So you have to weigh the pros and cons. If you’re looking for a more affordable entry into New York City real estate, and have the stomach to navigate the co-op process, then, by all means, apply for that apartment your wife liked.

Bottom line: Just be sure you won’t want to move in a couple of years from now because you likely won’t be able to rent it out for long, if at all.

By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

[ad_2]

Source link

July 31, 2023
‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

[ad_1]

The numbers: Home sales inched up for the first time in four months, even as the U.S. housing market continues to deal with a dearth of listings.

Pending home sales rose by 0.3% in June from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

The figure exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 0.5% in June.

Transactions were still down 15.6% from last year.

Pending home sales reflect transactions where a contract has been signed for the sale of an existing home but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

Big picture: Home sales rose as the housing market contends with excess buyer demand and a shortfall in the supply of homes for sale.

Real-estate agents are looking to home builders to fill the gap as rate-locked homeowners hold out on selling. New-home sales surged in May, and while they lost some momentum in June, the broader trend is still upward.

The prices of new homes, which are generally seen as more expensive, are also coming down. The gulf between the median price of a new home and of an existing home narrowed in June, based on data from the NAR and the federal government.

What the real-estate experts said: “The recovery has not taken place, but the housing recession is over,” NAR chief economist Lawrence Yun said. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply.”

The NAR also said it expects rates for 30-year mortgages to average 6.4% this year and to fall to 6% in 2024.

The NAR also expects existing-home sales to fall 12.9% in 2023 from the previous year, to 4.38 million, before recovering in 2024 to a rate of 5.06 million.

The group also expects home prices to hold steady this year, falling only slightly by 0.4% to $384,900, before rising 2.6% next year to $395,000.

“The West — the country’s most expensive region — will see reduced prices, while the more affordable Midwest region is likely to see a small positive increase,” Yun added.

[ad_2]

Source link

July 27, 2023
‘There’s nothing in the data that shows prices crash’: America’s housing market is showing remarkable resilience

[ad_1]

The housing market may feel out of whack to home buyers coping with fast-rising home prices and 7% mortgage rates. But like it or not, the housing market is in the pink of health.

Several economic indicators that measure housing activity — from home prices to sentiment surveys — show that home builders and sellers (the few that are out there) are finding strong demand from home buyers.

News of the housing market’s relative health may be welcome to some — like real-estate agents and investors — but it’s becoming a concern for economists. The more buoyant the housing market, economists say, the more likely the U.S. Federal Reserve will unveil another interest-rate hike, which further heightens the risk of a recession.

“‘The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents.’”

— Torsten Slok, chief economist at Apollo

“The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents,” Torsten Slok, chief economist at Apollo, wrote in a note in May. And housing is a big part of how the government measures inflation, he added. This will make it more difficult to reduce inflation from 5% to the Fed’s 2% inflation target, he said.

If the Fed launches another rate hike, it would push mortgage rates, which are already in the 7% range, to go even higher.

“The housing market is in a very — if fragile — recovery,” Mike Simonsen, founder and president of real-estate analytics firm Altos Research, told MarketWatch.

“There appears to be more demand than available supply for homes, especially in the real-estate market,” he explained, which is keeping home prices high, but that doesn’t mean demand could evaporate if the current situation changes. Recall when rates doubled from pandemic-era lows in 2021 to 7% last year, which zapped home-buying momentum.

House hunters have adjusted their expectations. But if rates were to jump from 7% today to even higher levels, “I would not be at all surprised if homebuyers stopped abruptly again,” Simonsen said, stating his thesis for the fragility of the sector. Americans broadly expect rates to go over 8%, according to a March survey by the New York Federal Reserve.

MarketWatch looked at three housing-market indicators — and the picture looks rosier than ever:

Active listings are down — blame interest rates

Redfin’s deputy chief economist, Taylor Marr, said his go-to indicator was active listings.

Active listings are down this spring, compared to the previous year, according to the company’s data. At the end of June, the number of homes listed for sale on the market was down 8.1% over the prior year.

“It really captures that supply is pulling back significantly relative to demand,” Marr said.

About 14 million mortgages were refinanced during the COVID-19 pandemic. Few homeowners find it in their interest to sell their home and give up an ultra-low mortgage rate they secured during that time. Selling a home in July 2023, and purchasing a new one may entail taking a mortgage rate in the 7% range.

Redfin data says that active listings of homes are down.

As a result, the housing market is seeing an excess of demand and not enough supply, which has led to a resurgence of bidding wars in some parts of the U.S.

While this metric is showing signs of the housing market returning to life and heating up amid a shortage of houses for sale, Marr said he’s not yet ready to call it a recovery. “It’s hard to declare completely the bottom of the housing market,” he said.

Still battle-scarred by the housing crash of the Great Recession, Marr said economists “might be hesitant” to say that the housing market is in recovery mode. “We still have a lot of uncertainty with the economy ahead,” he added. “If the economy really takes a turn three or four months from now for whatever reason, it could certainly bring the housing market back lower than it was even last November,” he added.

The price gap between new and existing homes

With a major shortage of resale homes, new-home sales have been taking off.

Home builders, understandably, are thrilled about the inventory shortage.

The National Association of Home Builders measures builders’ sentiment in a monthly index, and that indicator has been very cheery of late. In June, the index turned positive for the first time in nearly a year. Builders were scaling back price reductions; they were happy about current sales conditions as well as sales over the next six months, the NAHB said.

“A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” said Rob Dietz, chief economist of the NAHB.

One of the major U.S. home builders, Lennar, also offered some commentary on its second-quarter earnings call last month. The company’s executive chairman, Stuart Miller, said that “the market and the economy will remain constructive for home builders as pent-up demand continues to come to market and consume affordable offerings.”

Miller also doesn’t expect the supply issue to be fixed anytime soon: “We believe that the supply constraint will continue to limit available inventory and maintain supply-demand balance,” he said on the call. “The core elements of the supply shortage will not resolve in the near term as the almost 15-year production deficit will take years to resolve.”

Home-builder confidence, as a result, is signaling high optimism about the future of the housing market, and a return to normalcy.

As a result, housing starts have spiked as builders scramble to meet the demand.

Builders have ramped up building new single-family and multi-family homes.

Ali Wolf, chief economist at Zonda, looks at how prices of new homes trend relative to resale homes as a key indicator of the health of the housing market. Her conclusion? Housing industry professionals involved in the construction and sale of new homes are out of a recession, given the robust demand.

In fact, demand has been so strong that new homes — generally considered to be more expensive than resales — have become more affordable in home buyers’ eyes given the competition in the existing home space.

Typically, new homes are 20% more expensive than resales, Wolf said. And today? That spread has fallen to 4%.

So what’s going on? Builders are not necessarily slashing prices. Instead, existing home prices have risen as homeowners are reluctant to sell.

That’s a good deal for buyers. New homes, Wolf said, are traditionally considered a “luxury good.” They’re brand new, and buyers can often customize them. They also require less maintenance than older homes.

Sellers are holding out on cutting prices

Simonsen, who leads Altos Research, said price cuts were his go-to indicator to gauge the health of the real-estate market. Specifically, price cuts formed a proxy for demand, he explained.

“When the houses are on the market, if there are no buyers for the current houses that are listed, people start taking price cuts,” Simonsen said.

And to be clear, price cuts jumped last year, when rates jumped, he added.

But that dynamic has since changed, as seen in the chart below. “There are currently fewer price reductions now than in 2018 or 2019,” Simonsen said.

Data from Redfin says that homeowners aren’t cutting prices on their homes when selling, possibly due to strong interest from buyers.

And for those of you holding out for home prices to crash? Keep waiting, Simonsen said.

“There’s nothing in the data that shows prices crash,” he said. Even if a recession hits at the end of the year, which results in more job layoffs, demand for home-buying falling, and an increase in foreclosures and distress, that’s still a few years from now, he added.

“There’s no signal of home prices crashing anywhere,” Simonsen added.

[ad_2]

Source link

July 11, 2023
HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

[ad_1]

Goodbye pandemic refi cash-outs. Hello HELOCs?

Home-equity lines of credit (HELOCs) and second-lien mortgages have been staging a notable comeback as U.S. homeowners look for liquidity and ways to monetize the pandemic surge in home prices, according to BofA Global.

It used to be that borrowers sitting on an estimated $33 trillion pile of equity built up in their homes could simply refinance and pull out cash, until the Federal Reserve’s rapid rate hikes began squelching the option.

Now, with mortgage rates above 6%, and the Fed penciling in two more rate hikes in 2023, cash-strapped homeowners have been seeking out alternatives to extract cash from their properties.

While cash-out refinances tumbled 83% in the fourth quarter of 2022 from a year before, HELOCs rose 7% and home-equity loans grew 31%, according to the latest TransUnion data.

“Borrower demand remains high, particularly given household budgets have been pressured by rising food and energy costs,” a BofA Global credit strategy team led by Pratik Gupta’s, wrote in a weekly client note.

Risky loans to subprime borrowers and home equity products helped precipitate the 2007-2008 global financial crisis and the era’s wave of devastating home foreclosures.

At the time, households had more than $1.2 trillion of home equity revolving and available credit (see chart), whereas the figure was closer to $900 billion in the first quarter of this year.

Home equity products are making a big comeback as households seek liquidity

BofA Global, New York Fed Consumer Credit Panel/Equifax

The pandemic saw home prices surge, giving a big boost to home equity levels. The Urban Institute pegged home equity in the U.S. at $33 trillion as of May, up from a post-2008 peak of about $15 trillion.

BofA analysts argued this time home equity products look different, with roughly $17 trillion of tappable equity across 117 million U.S. homeowners, and most borrowers having high credit scores and low rates.

“The vast majority of that — $14 trillion — is from the cohort of homeowners who own their homes free & clear,” Gupta’s team wrote.

Another $1.6 trillion of equity could be available from Freddie Mac and Fannie Mae borrowers, according to his team, which pegged an estimated 94% of all outstanding U.S. first-lien home mortgages now below 4% rates.

Major banks own the bulk of home equity balances (see chart), led by Bank of America Corp.
BAC,
+1.23%,
PNC Bank
PNC,
+0.57%,
Wells Fargo,
WFC,
-0.05%,
JPMorgan Chase
JPM,
+0.24%
and Citizens
CFG,
+0.35%,
according to the team, which notes several other major banks appear to have hit pause on their programs.

A smaller portion of HELOCs and second-lien mortgages have been securitized, or packaged up and sold as bond deals, while nonbank lenders have been offering the products as well.

Stocks closed lower Monday, taking a pause from a recent rally, as investors monitored weekend tumult in Russia. The Dow Jones Industrial Average
DJIA,
-0.04%
was less than 0.1% lower, while the S&P 500 index
SPX,
-0.45%
was off 0.5% and the Nasdaq Composite
COMP,
-1.16%
fell 1.2%, according to FactSet.

Related: The economy was supposed to cave in by now. It hasn’t — and GDP is set to rise again.

[ad_2]

Source link

June 26, 2023
I ruined my family’s finances by withdrawing from my 401(k) to buy a house – I regret it

[ad_1]

I recently made a panic decision to withdraw all my money from one retirement account and I am now closing on a house in February (about $200,000). I am 36 years old, married and have a 1-year-old. Half of me is regretting it, and I’m worried about next year’s taxes due to the withdrawal and the 10% penalty I paid.

I have been saving up money with my family in order to buy our first home. Recently, however, interest rates have risen, making me worry that this window to get an affordable house was closing. In a fit of panic, I withdrew all of our $26,000 saved money from my 401(k), putting it in a high-yield savings account (3.75%). We have now chosen a home and will be using around $18,000 of this money for the down payment.

I am now worried that I might have to pay income taxes and a penalty for the withdrawal itself. I am extremely anxious over this situation as I feel I have destroyed our family’s financial future and that we cannot afford to pay taxes on the money I withdrew.

My main concern or question is, is there a way to tell the IRS that this money is being used toward a house? Retroactively?

See: I’m a single dad maxing out my retirement accounts and earning $100,000 – how do I make the most of my retirement dollars?

Dear reader,

The first thing you need to do: Take a breath. Most decisions should not be made in a panic, especially when involving money.

Because you withdrew from your 401(k), yes, you will have to pay taxes and a penalty. Had it been a loan, you’d have to pay interest on what you borrowed, but it would be to your own account. Keep in mind however that loans from your employer-based retirement plans are also risky – if you were to separate from your job, for whatever reason, you’d be responsible to pay it back or it would be treated as a distribution.

I understand your sense of urgency in wanting to buy a home during a more favorable market, but your time now should be spent on getting yourself financially situated and saving for the future.

“I wouldn’t advise this or done it this way, but he’s not stuck and it’s not detrimental – it’s just a tough lesson to learn,” said Jordan Benold, a certified financial planner at Benold Financial Planning.

Get very serious about your current finances and find a way to earmark a portion of your income to savings if at all possible. There are a few things you should be doing.

First, assess how much you will be paying in taxes and penalties. I’m not sure what your tax bracket is, but did this distribution push you into a higher tax bracket? You can use a calculator or talk to an accountant to see what that withdrawal will incur in taxes – then make sure you can pay it, or talk to the Internal Revenue Service about an extension. There are penalties for failing to file your taxes or pay them, and you don’t want to add that on top of your stress.

Also see: We have 25 years until retirement and are saving 25% of our income – are we doing it right? And are we saving too much?

The IRS may not be able to do anything for you in terms of waiving those penalties – though it doesn’t hurt to ask, even if you have to wait on the phone for a while to talk to someone – but communication and attention to detail are key when it comes to your taxes. Getting an IRS agent on the phone and talking through your situation won’t be time wasted. There are so many rules, and an agent can help make sense of your options.

Read: The days of IRS forgiveness for RMD mistakes may soon be over

Once you get that sorted, look extremely carefully at whatever money you have coming in and what’s going out. You’re about to close on a home, and that costs money – not just the home itself, but all of the extras associated with closing. You may also need money for insurance, furniture, any repairs and so on if you haven’t factored that in yet, so fit that into your budget for when you sign the papers. Beyond that, list every expense you expect to have for the next 12 months – home insurance and taxes, a mortgage or utilities, groceries, medicine, any other nonnegotiable costs and add it all up. Don’t forget anything – ask your partner if there’s anything you may have forgotten.

Then compare it to your income. Are you under? Are you over? What changes can you make without totally draining your happiness? I always advocate for a balance…yes, in some cases you have to omit a few expenses for the time being when building up an emergency savings account or paying down debt, but don’t completely rob yourself of joy or all of your hard work may backfire. If you really need to buckle down, make a separate list of activities and entertainment you can get for free (or as close to free as possible)—walks in the park or on the beach with your partner and child, museums on free days, pot lucks and at-home movie nights with family and friends and so on.

Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

Earmark a portion of your income to replenish your retirement savings before you try saving for any other goals. (This is separate from an emergency savings account, however – you should have one of those.) You may do that with payroll deductions in your 401(k), or also by allocating some of your savings to an IRA outside of the 401(k).

Take some time to learn the rules of your retirement plans. For example, an IRA allows an investor to take $10,000 out of the account penalty-free if it’s for a first-time home purchase (whereas a 401(k) does not have that exception). It may be too late for that, but there are other perks with various retirement accounts.

The 401(k) has a higher contribution limit and also comes with the possibility of employer matches (if your company offers it), whereas an IRA allows for penalty-free withdrawals for college. With a traditional IRA, you’d have to pay taxes on the withdrawal, whereas with a Roth IRA you’ve already paid the taxes and won’t have to pay any more for withdrawing from your contributions (you may have to pay taxes on the earnings portion, so follow distribution rules closely).

Remember – you don’t want to make distributions from your retirement savings for just anything. You can borrow money for a home or college, but you can’t borrow money for retirement, so it’s important to protect those accounts. Familiarize yourself with the pros and cons of all accounts so that you can maximize your savings and diversify your withdrawal options when you finally get to retirement.

So just buckle down, get yourself in order and think of the future. “He’s got plenty of time – 30 to 40 years to work,” Benold said. “This might be a distant memory that he hopes he can forget.”

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

Readers: Do you have suggestions for this reader? Add them in the comments below.

[ad_2]

Source link

January 17, 2023
‘I’m paycheck to paycheck.’ I make $350K a year, but have $88K in student loans, $170K in car loans and a mortgage I pay $4,500 a month on. Do I need professional help?

[ad_1]

I’m the first of my generation to own a home and the first to earn this much annually and don’t want to mess this up. How, specifically, can a financial adviser help me?

Getty Images

Question: By the end of 2022, I will have made $350,000 before taxes as the sole breadwinner and head of household. This is a great starting point and I’m very aware how blessed we are to be in this position, but I’m always looking ahead on how to improve. I currently have $88K left in student loans (originally close to $150K) and very little credit card debt (less than $2K with more than $25K available). I have two auto loans totaling $170K for two electric vehicles at 5% interest.

I’ve recently been offered a $200K HELOC at 9%, which would help me bring down some of my monthly payments and do some small home repairs and improvements, but I want to make the right moves. And I’ve also been presented with a few long-term real estate investment opportunities that are rental properties out of state and are currently bringing it 10-12% ROI. But my biggest concern is that after taxes, 401(k) contributions, bills, savings and mortgage ($4,500), on paper I’m paycheck to paycheck. I’d like to use this HELOC to consolidate debt while also participating in some of these investment opportunities. I’m the first of my generation to own a home and the first to earn this much annually and don’t want to mess this up. How, specifically, can a financial adviser help me? (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

Answer: You have a few questions to tackle here, so let’s go one by one. The first being the HELOC. Yes, HELOCs can be a good way to consolidate debt, but the rate you’re being offered isn’t favorable, as average HELOC rates are a little over 6%. “I would ask if 9% is the best rate you can get, because it appears a bit high,” says Chris Chen, certified financial planner at Insight Financial Strategists. What’s more, “I would like you to consider the potential impact that our Fed policy and inflation are having on interest rates, as HELOCs usually have variable interest rates and we’re in an environment with rising rates. You may start at 9% and end up significantly higher,” says Chen.

What’s more, your student loans, car loans and mortgage are all likely less than 9%, so it’s not likely that consolidation via a HELOC would save you money. “You may want to start somewhere different, like the snowball method, where you focus on one loan, usually the smallest one, and direct all of your resources to pay off that loan while maintaining payments on the others,” says Chen. This method could work to finish off your student loans and maybe one of your car loans, to start with.

Have an issue with your financial adviser or have questions about hiring a new one? Email picks@marketwatch.com.

As for those real estate investments, what do you really know about those returns? “With regards to real estate investments, I assume that the 10% to 12% ROI you speak of is the income that you would be getting from the investment. If so, that’s very high and often when you get a return that is significantly higher than the norm, there’s something else that makes the investment less desirable. Be careful,” says Chen. (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

Certified financial planner Kaleb Paddock says you may actually want to work with a money coach before you work with a financial adviser. Whereas a financial adviser assists with developing investment strategies and long-term financial plans, a money coach offers a more educational experience and focuses on shorter term goals for money management. “A money coach will help you with paying off all of your debts, maximize your cash flow and help you create systems and processes to direct your money proactively,” says Paddock.

While having a high income is great, there’s a concept called Parkinson’s Law, which essentially states that your spending will always rise to meet your income no matter how high that income rises, explains Paddock. “Working with a money coach will help you defeat Parkinson’s Law, eliminate your debt and then enable you to supercharge your investing and life planning with a financial adviser,” says Paddock.

A financial adviser could help too, and Danielle Harrison, certified financial planner at Harrison Financial Planning, says to look for one who does comprehensive financial planning and can help you create a more holistic plan for your money. “They can assist you in the creation of both short and long-term goals and then help you by giving guidance on the financial decisions and opportunities you are presented with,” says Harrison.

A financial adviser would also help you take a long-term approach to your money and help you create a spending plan where you don’t feel like you’re living paycheck to paycheck on a $350,000 salary. “Everyone has blind spots when it comes to their finances, so finding a competent financial partner can be invaluable,” says Harrison. (Looking for a new financial adviser too? This tool can help match you with an adviser who might meet your needs.)

Have an issue with your financial adviser or have questions about hiring a new one? Email picks@marketwatch.com.

*Questions edited for brevity and clarity.

The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.

[ad_2]

Source link

December 3, 2022
Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

[ad_1]

We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

For many people living in the U.S., these are tough — and confusing — times.

On Friday, the Labor Department reported 263,000 new jobs in November, while the unemployment rate held steady at 3.7%. Layoffs remain low, despite mass job cuts in the tech sector. Average hourly wages have also risen 5.1% in the past year, but still lag behind inflation for many workers. And there were 10.3 million job openings in October — slightly down from the previous month’s 10.7 million.

Some people might see the latest economic data as both challenging and confusing.

After all, the cost of living rose 7.7% on the year in October. The once red-hot housing market is finally cooling, thanks to mortgage rates that have more than doubled over the last year amid the Federal Reserve’s attempts to rein in inflation, and rents, while moderating, have surged from pre-pandemic levels. Borrowing money to cover increased precarity is becoming more expensive too, with the average credit-card APR at 19.2% as of Nov. 30, according to Bankrate.

“‘It’s just mind-boggling, the disconnect that we’ve seen.’”

Given all the conflicting signals, economists say it can be difficult for consumers to know exactly how to feel about the economy right now. “It’s not new, this disparity between the actual facts on the ground about what’s going on in the economy and the sentiment,” said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank.

“I remember this summer it was just unambiguously the strongest jobs recovery we’ve had in decades,” she added. “There’s just absolutely zero chance that we were in a recession — not only were we not in a recession, we were in just an extraordinarily fast recovery — and the polling, a huge share of people actually thought we were in a recession. It’s just mind-boggling, the disconnect that we’ve seen.”

Still, the fact that inflation is eating into people’s savings — and that essential goods like food, energy and housing have spiked in cost — is bound to make many people unhappy.

Struggling to pay for rent and food

“Going into the pandemic, more than seven out of every 10 extremely low-income renters were already spending more than half of their income on rent. And then the pandemic hits; we saw a lot of low-wage workers lose their jobs and see an income decline,” said Andrew Aurand, vice president for research at the National Low Income Housing Coalition. “Then in 2021, we see this huge spike in prices. For a variety of reasons, they’ve struggled for a long time, and since the pandemic, it’s gotten even worse.”

Moderate-income Americans are struggling too. Maybe you can’t afford your favorite family meals, as the price of grocery store and supermarket purchases has jumped by 12.4% from last year. Or maybe you’re putting off a trip to see family this holiday season thanks to the higher cost of airfare, or you’re worried about losing your job as some business leaders warn of a recession. Perhaps you’re forced to rely on credit cards and personal loans, as credit-card debt is up 15% from a year ago.

MarketWatch has chronicled many of these changes, detailing renters’ frustrations, families’ tough choices at the grocery store, and the reality faced by would-be home buyers sidelined by higher rates and dwindling affordability.

But we would like your help telling an ongoing story about the American economy, centering the experiences of everyday people. Our readers know better than anyone about how today’s economic conditions have impacted their daily lives.

[ad_2]

Source link

December 2, 2022
Housing starts fall again as high mortgage rates scare off U.S. home buyers

[ad_1]

The numbers: Construction on new houses fell 4.2% in October as high mortgage rates put off buyers and forced builders to scale back, a situation that’s likely to continue through 2023.

U.S. housing starts slowed to an annual pace of 1.43 million last month from 1.49 million in September. That figure reflects how many homes would be built in 2022 if construction took place at same rate over the entire year as it did in October.

Economists polled by MarketWatch had expected housing starts to register a rate of 1.41 million after adjusting for the typical seasonal swings in demand.

New construction hit a record 1.8 million in April before tapering off.

The number of permits, meanwhile, slipped 2.4% to a rate of 1.53 million, down sharply from a record 1.9 million last December.

Permits foreshadow how many houses are likely to be built in the months ahead, assuming a stable real estate market. But a major increase in mortgage rates this year has depressed demand and forced builders to scale back plans.

Key details: Single-family home construction fell 6.1% to an annual rate of 855,000 in October. Projects with five units or more registered a 556,000 rate, little changed from the prior month.

Housing starts are down 9% from a year ago, when mortgage rates briefly dipped below 3%.

Permits have fallen 10% from a year earlier.

Big picture: The highest mortgage rates in several decades have stifled new construction and are likely to do so through the next year or longer. The rate on a 30-year fixed mortgage recently topped 7%, more than double the rate a year ago.

While the U.S. has an acute need for more housing, fewer people can now afford to buy a home. Home prices are starting to come off record highs, but not by much.

Looking ahead: “Higher mortgage rates continue to exact a heavy toll on new construction,” said Richard Moody, chief economist of Regions Financial.

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.18%
and S&P 500
SPX,
-1.01%
fell in Thursday trades.

Also read: The median income needed to buy a typical home is over $88,000 — $40,000 more than before the pandemic

Related: Home prices will fall in 2023, but affordability will be at its worst since 1985, research firm says

[ad_2]

Source link

November 17, 2022
Home Depot Sales Up 5.6% in Third Quarter
[ad_1]
Business

Earnings

Home-improvement retailer logs sales increase even as it again records fewer transactions
[ad_2]
Source link
November 15, 2022