Homeowners Are Not Missing Mortgage Payments, Inventories Are Up From Last Year, Tomorrow Is A Big Market Day, Oh... & UFOs Are Popping Up All Over The Place | (2.13.23)
“The most dangerous distractions are the ones you love, but that don’t love you back.” ― Warren Buffett
What You Need To Know Today:
• The highlight (or low-light) of this week will be the Consumer Price Index (CPI) reading that will be published tomorrow. With earnings season coming to an end, much of the market has refocused on broader economic data, such as inflation. Further, the stronger-than-expected jobs report earlier this month has only increased the significance of tomorrow’s reading. This is because the Fed continues to double down on its hawkish policy messaging and indicates that it will not let up on rate hikes until inflation is significantly curbed. Heading into the report, the market is expecting a core month-over-month reading of 0.4% and a year-over-year reading of 6.2%. Remember, the Fed’s target for inflation is 2% so there is a long way to go — and it is likely that we will see a sharp market reaction if CPI comes in notably above or below the market expectation. If the figure comes in high, we can expect a market sell-off (bearish short to medium-term). The opposite is likely to be true if it comes in below expectations (bullish scenario).
TL;DR — The updated CPI reading tomorrow is likely to be a market-moving event.
• According to the latest Mortgage Monitor report from Black Knight, the national mortgage delinquency rate currently sits at 3.08% — below pre-COVID-19 pandemic levels.1 In fact, nearly all of 2022 was lower than 2019 levels with the exception of January and February. For context, a “delinquency” is triggered when a homeowner is at least 30 days overdue on making at least one mortgage payment. Now… the low percentages we are seeing today are the outcome of many factors, however, perhaps one of the most significant is that many homeowners purchased (or refinanced) their mortgages during a period of all-time-low interest rates in the United States. With that said, I would like you to pay attention to the considerable difference between where delinquents are today versus those leading up to the 2008 global financial crisis. The number of homeowners missing mortgage payments (which could ultimately lead to increased foreclosures and a mass introduction of new supply into the market) is simply not happening… Short of another black swan event like in 2020, data like this supports the idea that we are unlikely to see a massive “correction” in home values.
TL;DR — Mortgage payment delinquencies in the U.S. are currently very low. If you are a buyer waiting on the sideline for mass foreclosures you might be waiting for a while…
• According to Realtor.com, active listings started 2023 above both 2021 and 2022 levels so we have seen some inventory recovery. However, we remain considerably below 2017 - 2020 levels.2
TL;DR — Although a higher start to the year, home inventories still remain far below pre-pandemic levels.
UFO Sighting Timeline Tweet Of The Day:3
This is fine… totally fine. Nothing to worry about right? Right??
Source: Black Knight Research — Mortgage Monitor Report.
Source: Reatlor.com.
Source: Twitter.com — @KobeissiLetter.