Just days ago, weekly jobless claims fell to another pandemic-era low as the enhanced benefits were phased off, the lowest historical level since the Covid-19 crisis began, a drop of 122,000 from the previous week.

Jobless Claims Fall Again As Enhanced Pandemic Benefits Fade Away

Last week, weekly jobless claims fell to another pandemic-era low as the enhanced benefits were phased off, sending fewer people to the unemployment line. The Labor Department reported Thursday that first-time unemployment insurance filings totaled 290,000 for the week ending October 16th, down 6,000 from the previous week. Claims fell below 300,000 for the second consecutive week. Continuing claims also declined to 2.48 million, the lowest level since the Covid-19 crisis began, a drop of 122,000 from the previous week. 

Both decreases are the lowest since March 14th, 2020, and come a month after most pandemic-related programs that provided enhanced or extended benefits came to an end. The data suggest that the United States is getting closer to its pre-pandemic labor market normal, though there is still a long way to go.

Construction Numbers Fall Back from August Levels

Single-family permits fell 0.9 percent from the previous month to 1.041 million units annually, down from 1.050 million in August. Permits for multifamily development (units in buildings with five or more units) declined 21.0 percent from August to 498,000 units in September 2020. Year-to-date (YTD), 1.303 million permits have been issued, a 22.7 percent increase over the 1.062 million allocated during the same period in 2020.

Construction starts declined by 1.6 percent in September to 1.555 million; this was 7.4 percent higher than the 1.448 million recorded in September 2020. Single-family starts remained flat at 1.080 million permits per year, down 2.3 percent from 1.105 million permits a year ago. Permits for multifamily housing were down 5.1 percent from August, but up 38.2 percent from a year ago, at 467,000 units.

Despite the poor September statistics, the first nine months of the year saw a total of 1.214 million starts, significantly ahead of last year; this is up 19.5% from the 1.016 million recorded at the same time in 2020.

By the end of September, there were 992,000 housing units completed, a 6.0 percent increase over the 935,800 units completed during the same period the previous year. Single-family completions are up 7.1 percent to 710,500, while multifamily completions are up 4.2 percent to 276,400. There were also 1.426 million residences under construction and a backlog of 250,000 construction permits.

Higher Mortgage Rates are a Risk for Borrowers Who Wait, Forecasts Say

On Wednesday, the Mortgage Bankers Association (MBA) said that total mortgage demand — including applications to refinance and purchase homes — decreased 6.3 percent from the previous week. Requests for housing loans fell 5%, while refinancing applications dropped 7% of the prior week and were 22% lower than the same period a year ago. According to the mortgage bankers’ weekly survey, the average rate on a 30-year fixed-rate mortgage hit 3.23 percent last week, the most since April. The average rate for a 15-year mortgage, popular among refinancing homeowners, has risen to 2.54%, the highest level since July.

Mortgage rates are still historically low, despite recent hikes. However, current reports show that they will continue to rise. Fannie Mae and Freddie Mac, the two largest mortgage companies, recently produced separate estimates indicating that 30-year mortgage rates will average in the mid-3% level next year. Meanwhile, according to a recent prediction, the Mortgage Bankers Association anticipates that rates will average 4% in 2022. Despite projections of increased rates, borrowing costs are still lower than before COVID-19, at least for the time being.

Next week’s potential market-moving reports are:

  • Monday, October 25th – No Report
  • Tuesday, October 26th – S&P Case-Shiller Home Price Index, New Home Sales
  • Wednesday, October 27th – No Report
  • Thursday, October 28th – Initial Jobless Claims, Continuing Jobless Claims, Pending Home Sales
  • Friday, October 29th – Consumer Spending, Employment Cost Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047

Learn How This COVID-19 Pandemic Will Affect Your Monthly Revenue With Your Income Property And How To Cushion The Blow

As of March 25, 2020, unemployment claims grew to over 3.3 million, a record high. As states shut down non-essential activities, many businesses have been hit hard, particularly in the restaurant, retail, and entertainment industries. While the government is discussing relief proposals for individuals and businesses, rent is due across the country on April 1.

Some landlords have already gotten negative publicity for sending warning letters to tenants that no matter what type of layoff they’ve suffered due to COVID-19, they must pay their rent on time and in full. Text messages between tenant and landlord have been posted on the internet showing a range of responses, from concern and cooperation to cold-hearted “pay now or we will evict you.”

If you own property in the city of Los Angeles, Mayor Garcetti issued an eviction moratorium on March 15, 2020, due to the coronavirus pandemic. If your tenants have lost all or part of their income because they were laid off or the business where they worked has closed, they may not be evicted until the order is lifted. Similarly, they may not be evicted due to healthcare costs that they had to spend during the epidemic, or childcare costs because schools have been closed.

If you own income property, what should your response be to tenants’ ability to pay rent in the face of sudden, unprecedented layoffs?

The Los Angeles city moratorium on evictions doesn’t say that tenants don’t have to pay rent. It gives them up to six months to catch on back rent they couldn’t pay during the coronavirus crisis. Most other cities that have issued similar orders also say that tenants have a specified amount of time to catch up on back rent.

Looking at some of the harsh letters that have been publicized via social media, we advise that your best approach is to be courteous in your communications with tenants and to be flexible. The crisis may grow worse before it gets better, and aid from the government could be delayed for weeks. Work with your tenants to catch up on back rent as they get back to work.




Given The Status Of the Fed’s Current Interest Rate at 0%, Is Now The Best Time to Refinance Your Mortgage?

Since the Federal Reserve cut its prime interest rate to zero in mid-March 2020, many onlookers thought that mortgage interest rates would drop. That hasn’t happened. With a few exceptions such as VA 30-year fixed-rate mortgages, nearly all mortgage interest rates increased. New mortgages for home purchases and refinances are all affected. The average rate of increase within the first few days after the Fed’s unprecedented announcement was 29 basis points (.29%) according to MarketWatch.

Why are rates increasing instead of decreasing?

Fears over people’s ability to pay their mortgage at all are the likely reason for short-term percentage rate increases. VA mortgage interest rates may have decreased slightly because most, if not all, reservists are either called up or have been notified to be prepared to return to service as a result of the COVID-19 pandemic. The VA home loan guaranty may be encouraging lenders to reduce interest rates slightly in response to the current crisis.

Refinance Your Mortgage

Other lenders and programs are seeing interest rate increases for a variety of reasons. Most financial advisers are saying that so much is uncertain in the current COVID-19 pandemic and crisis that it’s probably impossible to predict whether rates will increase or decrease in the weeks to come.

Other news impacting mortgage rates

The Internal Revenue Service has announced that taxpayers can defer tax payments until July 15, although tax returns must be filed by the April 15 deadline. Those who are self-employed, including people who own and lease property, will need to continue to make quarterly estimated payments, however.

Property sales will likely be impacted by the uncertainty in tax filing rules. The IRS is still considering whether to extend the April 15 tax filing deadline in general for individual and corporate taxpayers.

In the short-term, home mortgage rates have increased. Good news may be on the horizon, however, in the form of lower rates for refinancing and home purchase after the COVID-19 crisis begins to be resolved.