Mortgage Update - December 16th, 2024
Good morning, team! Is anybody else exhausted from all the holiday parties yet š„³? I think I need a solid week to recover and we arenāt even through the actual holidays yet š“š“.
But that doesnāt stop us from delivering all the news from last week and how it impacts the housing/mortgage industry.
Letās dive in!
We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers stay informed. Be sure to follow us!
Read time: ~4 minutes
Major Inflation Metrics Move Higher š¤®
The two most important inflation metrics (CPI and PPI) were released last week for November. Before we jump into the numbers, letās break down each!
CPI (Consumer Price Index) is all about you, the shopper. It measures the prices of things you buy, like food, clothes, and gas. If CPI goes up, it means the cost of living is getting more expensive.
PPI (Producer Price Index) is about businesses. It looks at the prices companies pay to make things, like the cost of raw materials or parts. If PPI goes up, it might mean businesses will raise the prices of the stuff they sell to us later.
CPI = the prices you see at the store, and PPI = the prices businesses deal with before the product even gets to the store! šā”ļøš¬
So what happened?
November CPI rose to 2.7%, which was expected but higher than the 2.6% last month. Core CPI was 3.3%, also expected.
November PPI rose to 3.0%, above the expectation of 2.6%. Core PPI rose to 3.4%, when it was expected at 3.2%.
Is there a silver lining? Rent prices are starting to cool. Median rent in the US declined 0.7% annually in November to $1,595. That is the lowest since March 2022. As rent prices drop, that will pull down shelter inflation, which has a very big influence on CPI.
This week we will get the Fedās decision on whether they cut the Fed Funds Rate by 25bps. Traditionally, The Federal Reserve doesnāt cut rates when inflation is spiking because it would make the problem worse. Hereās why:
Low interest rates = more spending. When rates are low, borrowing becomes cheaper, so people and businesses spend more money. While thatās great for economic growth, it also increases demand for goods and services.
High demand + limited supply = higher prices. If inflation is already high, cutting rates would add fuel to the fire, making prices rise even faster.
At a minimum, the Fed should pause rate cuts. That being said, the markets have 93% confidence that Jerome will still cut 25BPS on Wednesday š
Key Takeaway: November inflation showed slight increases, with CPI rising to 2.7% and PPI surprising at 3.0%, signaling persistent pricing pressures. A silver lining is cooling rent prices, which dropped 0.7% year-over-yearāthe lowest since March 2022āand could help lower overall inflation in the future. Despite inflation rearing its ugly head again, markets are betting on a 25bps Fed rate cut this week, though pausing might be the safer move to avoid reigniting higher prices.
Top Agents Spill Their Secrets š£ļø Insights You Canāt Miss!
Amid the holiday festivities, I made time to attend a powerhouse realtor panel featuring some of Central Ohioās top producers. Their advice for new agents was not only insightful for those starting out but also incredibly valuable for me. After all, the life of a realtor and loan officer shares a lot of parallels.
This wasnāt your average group of agentsāthe panel collectively brought in nearly $85M in transactional volume this year. šŖšŖ
Here are some of the key takeaways from their wisdom:
How Do You Start Your Day?
Do the thing you HATE the most first. Get it done so its out of the way.
Your day starts the night before so youāre starting the day with a clean slate. This helps improve sleep as well.
One Mistake Iāll Never Make Again Isā¦
Partner with somebody with a buying problem. Before I knew it, we bought 6 properties and no income. Be planful with the income.
Donāt buy cheap tools/materials. Its obviously that a lot of amateurs are trying to renovate homes nowadays. Donāt skimp!
One Piece of Advice for New Agents
You MUST be consistently prospecting/consistently marketing.
Learn as much as you can, donāt be afraid to ask for help.
Lean into what you love, join a local club. It will force you to network and grow your sphere.
Worst Thing an Agent Can Do
Be a poor communicator.
Lack a deep knowledge of the standard purchase contract.
Best Thing an Agent Can Do
Be proactive with solutions vs. just bringing problems
#1 Concern of Buyers
Fear of overpaying and ensuring the home is move-in ready.
Establishing the highest offer the buyer is willing to pay before losing the deal.
Losing the deal. A way to combat that as an agent is to call the listing agent, introduce your lender, explain why you/your client/your lender are the best option, have the lender call the listing agent immediately. This sets the buyer up for success.
Key Takeaway: You have to learn from those who have been there before. My biggest takeaway was hearing the way the best agents in the industry sell themselves, their clients AND their lenders. They over-communicate to make sure its obvious their deal is the strongest on the table.
Real Estate Social Media Ideas for the Holidays š šš
Shawn Kaplan, a friend and Growth Only 2024 Coach of the Year, compiled an awesome list of ideas that real estate agents and loan officers can implement during the holidays to mix up social media. I teased out a few of the ideas below but check out the full video for a deep dive to help you grab more attention as we get closer to the big guyās big night š
Holiday Home Tour Series - Walk through homes decorated for the holidays.
12 Days of Homeowner Tips - Get unique with this one, not the standard āremove the hose from the outdoor faucetā.
āWhatās Your Holiday Wish?ā Polls - This could help with engagement metrics.
Gratitude Giveback Campaign - Post details of a toy drive or other campaign your team is doing then share the stories (about the charity, delivering the goodies, etc.).
Elf on a Shelf Adventures - Put a real estate spin on it.
Hot Cocoa Q&A - Hold a livestream/office hours to answer first time homebuyer questions while enjoying a nice cup of hot cocoa ā