Economic data indicating that the U.S. economy has remained resilient despite the Federal Reserve‘s tightening monetary policy led to a substantial increase in mortgage rates last week. Does this mean mortgage rates are close to reaching the 7% level again? 

“Mortgage rates have been rising after the jobs report was solid, retail sales beat expectations, and the homebuilder’s confidence is rising,” Logan Mohtashami, lead analyst for HousingWire, said. “We have an array of economic data that has been good.”

In January, inflation continued to climb well above the Fed’s target, at an annual rate of 6.4%. In addition, total nonfarm payroll employment rose 517,000 jobs from December, breaking the downward trend, and retail spending increased 3%, the largest monthly gain in nearly two years. Meanwhile, builder confidence in the market for newly built single-family homes rose seven points in February from January’s reading. 

Positive economic indicators were enough for the 30-year fixed-rate mortgage to rise again to 6.32% as of Feb. 16, up 20 basis points compared to the previous week, according to the latest Freddie Mac survey. A year ago at this time, the same rates were at 3.92%. 

Other indexes show mortgage rates that are even higher. At Mortgage Daily News, rates were at 6.75% as of mid-day on Thursday, up 13 basis points compared to the previous day. At HousingWire’s Rates Center, the Optimal Blue data showed rates at 6.48% on Wednesday, compared to 6.28% in the previous week. 

“Mortgage rates moved up for the second consecutive week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The economy is showing signs of resilience, mainly due to consumer spending, and rates are increasing. Overall housing costs are also increasing and therefore impacting inflation, which continues to persist.”

Where are mortgage rates heading to?

Economists believe that mortgage rates may rise to the 7% level soon amid the stronger-than-expected U.S. economic performance, adding more affordability challenges to the housing market. The last time rates were at 7% was in November 2022.

“Mortgage rates are going to move in the 6% – 7% range over the next few weeks,” George Ratiu, Realtor.com manager of economic research, said in a statement. 

Ratiu added that the Fed signaled that it will continue to raise rates this year but at a less aggressive pace than in 2022. The expectation is for 25 basis point increments.

“The central bank is acknowledging that it sees its monetary actions having a tangible effect on inflation. The CPI data out this week seems to confirm the bank’s views,” Ratiu said. 

Mohtashami estimates mortgage rates at 7.25% and the 10-year yield at 4.25%, the highest level in 2023, according to his forecasts. 

However, according to Mohtashami, “the growth rate of inflation will look softer as the year moves on as the real rent inflation data starts to look more in line with current market data.” 

Rising rates, however, tend to bring affordability challenges. 

“For housing markets, the rebound in rates translates into higher mortgage payments from a year ago, but lower than the summer 2022 peak of the market, because prices have dropped 11% over the past seven months,” Ratiu said. 

Ratiu estimates that the buyer of a median-priced home is looking at a $1,985 monthly payment at today’s rate, 42% higher than last year, yet 6% lower than it would have been in June 2022. 

This means a challenging market for mortgage companies. 

“Economic uncertainty, affordability challenges, and inventory constraints are keeping some would-be buyers on the sidelines,” Bob Broeksmit, Mortgage Bankers Association‘s (MBA) president and CEO, said in a statement. “Applications to refinance and buy a home declined on both a weekly and annual basis, as an uptick in mortgage rates curbed activity.” 



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Roughly a year after Mortgage Coach and Sales Boomerang were acquired by a private equity firm, they’ve merged their services onto one platform and rebranded to “TrustEngine.”

The company unification and new platform come as mortgage origination volume falters and lenders struggle to stay afloat in a high mortgage rate environment.

The TrustEngine Borrower Intelligence Platform, as the platform is called, wraps around the entire mortgage tech stack to drive origination volume by “identifying loan opportunities and engagement strategies tailored to each borrower’s needs,” the companies said in a statement Wednesday.

In early 2022, Philadelphia-based private equity firm LLR Partners bought controlling stakes in two fintechs, which are focused on attracting and retaining mortgage borrowers and making loan originators more efficient.

TrustEngine, led by CEO Rich Harris, said borrower intelligence platforms are rapidly gaining traction as mandatory technology for modern mortgage lenders.

TrustEngine says its platform drives increased loan applications, customer loyalty and team performance by collecting, enhancing and analyzing borrower data; suggesting actionable borrower opportunities; pacing opportunity delivery; and guiding borrower and loan officer interactions that result in conversions.

The company says more than 200 independent mortgage companies, credit unions, banks and brokers currently use TrustEngine’s solutions.

Company executives say that TrustEngine is the only solution on the market today that equips mortgage advisors with “proven scripts and dynamically generated presentations” that show borrowers their best loan options based on their individual profile. The platform automatically measures conversion at the branch and individual level across various loan types and suggests borrower outreach strategies across the lifespan of the loan.

“This groundbreaking solution will help lenders become lifelong champions for borrowers by gaining access — for the first time in history — to the kind of world-class customer intelligence leveraged by global leaders like Apple, Microsoft and Amazon,” Harris said in a prepared statement Wednesday.

In January 2022, Sam Ryder, principal at LLR Partners, cited the companies’ solutions products as the reason for the capital investment. He said lenders reported that they received a high return on investment from the products, and LLR felt that there was significant upside in the firms, even though margins in the industry are narrowing due to higher rates.



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Temperatures are slowly starting to rise in many parts of the country as we head into spring — and so is homebuilder sentiment, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report, released Wednesday.

In February, builder confidence in the market for newly built single-family homes rose seven points from January’s reading, to an index value of 42. This is the second consecutive month of gains after a year of decreases, and it is the index’s strongest reading since September 2022.

The NAHB/HMI report is based on a monthly survey of NAHB members, in which respondents are asked to rate both current market conditions for the sale of new homes and expected conditions for the next six months, as well as traffic of prospective buyers of new homes. Scores for each component of the builder confidence survey are then used to calculate an index, with any number greater than 50 indicating that more homebuilders view conditions as favorable than not.

The NAHB attributes the increase to the slight easing of mortgage rates, which the trade organization feels is a signal that the housings market might be turning, despite builders still dealing with high construction costs and supply chain issues.

“With the largest monthly increase for builder sentiment since June 2013, the HMI indicates that incremental gains for housing affordability have the ability to price-in buyers to the market,” Alicia Huey, an NAHB chairman, said in a statement. “The nation continues to face a sizeable housing shortage that can only be closed by building more affordable, attainable housing. However, the two monthly gains for the HMI at the start of 2023 match the cautious optimism noted by the large number of builders at the recent International Builders’ Show in Las Vegas, who reported a better start to the year than expected last fall.”

According to Huey, the most challenging part of the homebuilding market is the construction of entry-level homes, and he called on policymakers to “help by reducing the cost of developing lots and building homes via regulatory reform.”

Builders are continuing to offer a variety of incentives. However, data shows that things may be stabilizing. In November, 36% of builders were reducing home prices, but the percentage of builders who are dropping home prices declined to 31% in February. In addition, the average price drop decreased from 8% in December to 6% in February.

“While the HMI remains below the breakeven level of 50, the increase from 31 to 42 from December to February is a positive sign for the market,” Robert Dietz, the NAHB’s chief economist, said in a statement. “Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle. And while we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024.”

Three other indices monitored by the NAHB also posted gains in February. The gauge measuring current sales conditions rose to 46, up six points month over month. The component analyzing sales expectations for the next six months rose 11 points to a reading of 48, and the index that charts traffic of prospective buyers rose six points from January to a reading of 29.

Regionally, the three-month moving averages for HMI rose in all four regions, with the West gaining three points to a reading of 30, the South rising four points to 40, the Northeast adding four points for a reading of 37 and the Midwest rising one point to a reading of 33.

Another survey, the BTIG/HomeSphere State of the Industry Report, also reported a leveling in homebuilder outlook.

According to the survey, 54% of builders saw a yearly decrease in sales last month, down from 71% in December. Despite a 41% yearly decrease in sales, builders again reported a slight improvement in performance relative to expectations, with 21% of respondents reporting that sales were better than expected, and 38% reporting that sales were worse than expected. These metrics improved from 11% and 35%, respectively, in December.

The BTIG/HomeSphere study is an electronic survey of approximately 50-100 small- to mid-sized homebuilders that sell, on average, 50-100 homes per year throughout the nation. In January, the survey had 107 respondents.

The January survey included a special question about the impact of mortgage rates, with 80% of builders reporting that lower rates have positively impacted business.

“Conditions continue to be sluggish overall, but we believe the environment is improving heading into the Spring selling season,” BTIG analyst Carl Reichardt said in a statement.



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Expectations that high inflation may persist for longer than previously projected put pressure on mortgage rates last week. In turn, it affected borrowers’ appetite for home loans. 

The latest Mortgage Bankers Association (MBA) survey showed that mortgage loan application volume declined 7.7% for the week ending Feb. 10 from the previous week. Compared to the same week last year, mortgage apps are down 57%. 

“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Mortgage applications decreased for the second time in three weeks because of these higher rates.”

The Bureau of Labor Statistics reported on Tuesday that the Consumer Price Index rose by 6.4% in January compared to a year ago. The increase is lower than the 6.5% posted in December and the smallest year-over-year since October 2021.

But, according to experts, the report brought adjustments to the fourth quarter CPI numbers, indicating the disinflation process was slightly slower than expected. 

“Today’s report suggests that the downward trend in inflation may be bumpier than had hoped. It means that the Federal Reserve will push forward with rate hikes through the spring, which will increase borrowing costs for consumers and businesses,” Lisa Sturtevant, Bright MLSchief economist, said in a statement. 

According to the MBA data, the 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.39% for the week ending Feb. 10, compared to the previous week’s 6.18%. Rates for jumbo loan balances (greater than $726,200) rose from 5.96% to 6.26% in the same period. 

Mortgage rates were even higher at Mortgage News Daily on Wednesday morning, marking 6.62%.   

Mortgage loan types 

The MBA data shows refinancing demand is in free fall, as there is little financial incentive to act, which is keeping borrowers on the sidelines. Compared to the previous week, applications for refis declined 13% for the week ending on Feb. 10. It was also 76% lower than the same week one year ago. 

Consequently, the share of refis in mortgage activity fell to 32% of the total applications from 33.9% the previous week. The FHA share rose from 11.9% to 12.6%, the VA share declined from 13.4% to 12.6%, and the USDA remained at 0.6%. Adjustable-rate mortgages increased to 6.9% of the total. 

According to the data, purchase applications are also declining, down 6% week over week and 36% year over year. Last week, purchase apps hit the lowest level since the start of the year. 

“Potential buyers remain quite sensitive to the current level of mortgage rates, which are more than two percentage points above last year’s levels and have significantly reduced buyers’ purchasing power,” Kan said.  



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You may not have heard the terms “dual pathing” or “single point of contact” lately, but just wait. COVID-era forbearances are ending and odds are some borrowers won’t be able to come current on their loans without help. HousingWire recently spoke to Amanda Phillips, executive vice president of compliance at ACES Quality Management, about getting servicing staff and technology ready to meet upcoming regulatory requirements while ensuring quality throughout the life of the loan.

HousingWire: As financial institutions plan for 2023, what is their best line of defense in maintaining loan quality and mitigating risk?

Mandy-Phillips-Headshot

Amanda Phillips: We agree with other market players that 2023 will be a challenging origination environment. Fannie Mae projects that single-family mortgage origination volume for 2023 will decline 20% from $1.66 trillion to $1.33 trillion along with a 20% decline in home sales. As a result, margins will be tight as origination activity slows and lenders earn less per loan.

Many lenders will look to servicing revenue to carry them through this slow originations market. To confidently rely on that revenue, however, servicers must assess the integrity of their servicing portfolios and staff to ensure compliance with all relevant servicing rules, guidelines and regulations. These teams will need to rely on updated technology not only to stay on top of regulatory changes but to communicate effectively and efficiently with other internal stakeholders.

Ultimately, there are inherent risks in the servicing process. Ideally, risk management teams have already identified those risks and internal audit is making sure the proper processes and procedures are in place to address those risks. From a transactional standpoint, it is then up to the QC team to ensure that the organization is following those policies and procedures and are mitigating the risks. Without technology, this will be an overwhelming burden. So, I would say one essential line of defense is to make sure your technology and staff are up to the challenges ahead.

HW: How can lenders keep up with evolving servicing regulations, and what trends do you expect to see this year from a servicing perspective?

AP: With recent and upcoming regulatory requirements, servicers are gearing up to deal with borrowers exiting COVID-era forbearance programs. Servicers haven’t faced this much regulatory oversight since 2012. However, as cyclicality is a hallmark of the mortgage industry, the fact that regulatory focus has once again turned to servicing should be no surprise, especially given the looming fears of another foreclosure crisis.

Inevitably there will be homeowners unable to bring their mortgage current as they exit forbearance, which means mortgage servicers will need to engage in loss mitigation processes and options for those consumers. If the servicer is ultimately unable to find a successful loss mitigation option for these borrowers, then the servicer may ultimately enter the foreclosure process, with its own requirements, timelines and potential costs.

Servicers will need to comply with requirements from CFPB, the GSEs (or other investors), as well as state and local regulators – and that’s going to take technology that can be quickly adapted as new requirements emerge. For example, to ensure our clients could prepare and audit up-to-date guidelines, ACES Quality Management was the first to incorporate Fannie Mae’s updated guidelines into ACES Quality Management & Control software and publish on our Compliance NewsHub.

In addition, servicers need to stay abreast what’s happening from a regulatory perspective. ACES hosted a webinar on Feb. 8 titled “Hot Topics on Mortgage Servicing & Originations Compliance,” where we covered the current outlook, for mortgage servicing compliance, regulatory trends related to redlining/digital redlining/appraisal bias and fair lending/servicing regulatory activity and trends.

HW: How can servicers set their departments up for success regardless of the current market trend?

AP:  Servicers should be examining their existing policies and procedures to ensure compliance. If adjustments need to be made to align with current rules and regulations, those changes need to be prioritized and documented.  This way, come exam time, the servicer can show evidence of self-identification, correction, and remediation.

It is not enough to ensure the documented policies and procedures reflect what is required. Financial institutions should also audit employee activities against their documented policies and procedures, identify any areas where policies and procedures are not being followed and document both the corrective action taken and plans for follow-up to ensure compliance going forward. 

One of the items from the CFPB’s servicing guidance that has received less attention is limited English proficiency, or LEP. In addition to ensuring servicers are providing good customer service to borrowers and adhering to all loss mitigation regulatory requirements, the CFPB will also be examining how servicers are communicating with borrowers for whom English is not their primary language. This has been a recurring topic over the past several years, most recently with Fannie Mae and Freddie Mac, but now, it’s popping back up from the CFPB. So, servicers will need to take a closer look at how they are handling both written and verbal communications for non-English-speaking borrowers.

By paying close attention to signals from the CFPB and engaging in proactive self-examination, servicers can be ready to defend their business practices.

HW: What is your top advice for lenders that have neglected quality control?

AP: Servicers are always going to have to deal with the fallout from loans that were not originated properly or were originated using poor underwriting standards, especially those originated during high volume years. We saw this in the past with a lot of the FHA Streamline Refinances and some other, similar products – invariably, you’re going to see increases in delinquencies, more issues regarding straw buyers, etc. That’s always going to be there. 

Lapses in control on the origination side inevitably make their way down to servicing, forcing servicers to deal with problem loans because of one or more failures upstream. Of course, it’s one thing if the loans are servicing-released, but if you are servicing your own originations or have a sub-servicer, then your servicing group needs to make sure they are informed and following QC findings on the lending side and conducting what I consider risk-based testing (because testing 10% of your loans just randomly is not going to give you everything that you need) to ensure that any risk or lack of controls are being shored up. 

Servicers need to make sure to identify those pockets of risk, and if that comes from the origination side, then so be it. You’re constantly going to be re-evaluating where those risks are, but then you need to have the data and the audit steps in place to make sure that you are covering those things.

It really should be a constant re-evaluation and recalibration. 



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Given the hotter inflation reported in Tuesday’s CPI data, can mortgage rates go above the 2022 peak of 7.37%? Initially the 10-year yield fell after the report, then rose higher, only to fall back down again. For all the hype around today’s stock market close, it was a dud of a Valentine’s date if you ask me.

A lot of times, on days when big economic reports are released, you can get wild intraday action but not have much happening by the end of the day. We still have a lot of big housing market economic reports this week, so stay tuned as retail sales, builders confidence, purchase apps, jobless claims, producer price inflation, and leading economic indicators data are still to come.

2023 bond and mortgage rate forecast

When I do my mortgage rate forecasting for each year, I don’t target mortgage rates but where I believe the 10-year yield channel will be with a set of variables in play. Of course, post-COVID-19, we have had extreme variables that can crazily move the market.

However, for 2023 I believe this range on the 10-year yield would be appropriate, considering the labor market is still solid. If the labor market starts to get worse — meaning jobless claims rise with some speed — the initial range of this forecast will break, and bond yields will go lower. The data isn’t there yet to even have that conversation. 

From my 2023 housing market forecast: “For 2023, the 10-year yield is currently at 3.70% and I believe the 10-year yield range this year will be between 3.21%-4.25% as long as the economy stays firm. Now if the economy gets weaker, especially in terms of the labor market breaking, which for me is jobless claims rising to 323,000 and beyond, then we can get as low as 2.73% on the 10-year yield.

“With that 10-year yield range (3.21%-4.25%), mortgage rates should be between 5.25%-7.25%. This assumes that the spreads are wide and pricing for mortgages is still weak. However, if the spreads get better, we could even see mortgage rates under 5% if the 10-year yield breaks under 3%.”

What do we know about inflation? The growth rate is cooling from last year’s peak, and the shelter inflation portion of housing will cool down over time. It’s widely known that the CPI inflation shelter data lags a lot, and since it’s the most significant component of core inflation, it’s a big deal.

This is why I went on CNBC last year to say the growth rate of rents falling was a positive for inflation for 2023. However, the CPI data lags badly on this reality, and the fear was that the Federal Reserve didn’t understand this.

However, then the Federal Reserve actually created a new index that excludes shelter to adapt to the more current data, which shows the growth rate of rents is cooling down. Now the Fed focuses on core inflation data, excluding food and energy. However, even if I take shelter away and leave food and energy inflation in the equation, the growth rate of inflation is cooling more noticeably.

Without rent inflation taking off, you can kiss the 1970s inflation comparisons goodbye, and this is why the 10-year yield never broke above 5.25% — a critical level for me to even have a thought about 1970s-style inflation. As you can see below, the growth rate of rents took off a few times back then. After the 1970s, the growth rate was stable for decades.

My mindset with inflation data since October of 2022 has been to give it time: 12 months from now, we will be in a better place. If the economy went into a job-loss recession, the bond market would get well ahead of the Fed and mortgage rates would fall faster. However, we aren’t there yet.

The Fed pivot won’t happen until jobless claims break over 323,000 on the four-week moving average, but the truth is the bond market isn’t old and slow; they will head that way before the Fed does. 

CPI report 

From BLS [bolding is mine]: “The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in January on a seasonally adjusted basis, after increasing 0.1 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.4 percent before seasonal adjustment. The index for shelter was by far the largest contributor to the monthly all items increase, accounting for nearly half of the monthly all items increase, with the indexes for food, gasoline, and natural gas also contributing.”

As we can see below, the growth rate of inflation is cooling, but shelter inflation, “Which is lagging real-time data,” is keeping the core data higher than it should be today. Remember, you should always focus 12 months out with inflation data and tie it to the weekly economic data. This is why we created the weekly Housing Market Tracker.

Other rental inflation data shows a cool-down, common with global pandemics. However, not only is the real-time data cooling, we have nearly 1 million apartments that will be built in the near future, and the best way to deal with inflation is always more supply.

Hopefully, this explanation of my forecast for 2023, including the 10-year yield, mortgage rates, and inflation gives you a better understanding of why I don’t believe mortgage rates can rise above last year’s peak of 7.37%. 

Now, one way mortgage rates could blow past 7.37% is if the economy starts to boom again, supply doesn’t grow, and wage growth, which has been cooling, reverses, and explodes higher again.

If rents and wages took off higher again, some new war created more of a supply shock, and the labor market got even tighter, this would counter my discussion that the growth rate of inflation has peaked. However, so far, it doesn’t look like anything I just talked about is happening, so give it more time, and the inflation growth rate will moderate. 



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Earnings at Fannie Mae in 2022 sank to $12.9 billion as the housing market deteriorated, down dramatically from $22.1 billion in 2021, the government sponsored enterprise reported Tuesday.

Last year’s $9.3 billion decrease in net income was primary driven by an $11.4 billion decline in home prices and a $1.6 billion shift to investment losses, which was partially offset by a $1.1 billion increase in fair value gains, the GSE said.

In the fourth quarter, Fannie Mae recorded $1.4 billion in net income, down from $2.4 billion in the third quarter and $5.2 billion a year earlier. In a slowing housing market, Fannie Mae also boosted its provision for losses for the third consecutive quarter.

“Our 2022 results reflect a housing market in transition. We’re proud that Fannie Mae helped approximately 2.6 million households buy, refinance, or rent a home last year, while generating solid earnings and continuing to build our net worth,” CEO Priscilla Almovodar said in a statement.

Almovodar, who took over late last year following a wave of departures in Fannie’s C-Suite, added that the GSE expects that “there will be economic headwinds in 2023 and that housing affordability will continue to remain a challenge for many homebuyers and renters.”

The GSE said its net worth reached $60.3 billion in 2022, up from $47.4 billion just a year prior. Despite the gain, it remains “significantly undercapitalized,” with a shortfall of $258 billion.

Fannie Mae’s single-family MBS issuances were $628 billion in 2022, down from $1.39 trillion in 2021 and $1.34 trillion in 2020, which Fannie staffers attributed to lower refinance activity due to higher mortgage rates. In a bright spot, serious delinquency rates remain low. On the single-family side, they accounted for just 0.65% in the fourth quarter, Fannie Mae’s 10K filing shows.

The GSE is forecasting total single-family originations to decrease by 29% in 2023, dropping from an estimated $2.36 trillion in 2022 to $1.69 trillion in 2023. Its economists project refi origination volume to be just $367 billion in 2023, down from $704 billion last year. It expects a “modest recession” to occur in the first half of the year, resulting in higher unemployment.



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Consumer prices continued to climb in January, but they rose at the lowest yearly pace recorded since October 2021, according to data released Tuesday by the Bureau of Labor Statistics (BLS). This is welcome news for the Federal Reserve, which is continuing to raise interest rates in an attempt to curb inflation via consumer spending.

The Consumer Price Index rose by 6.4% in January compared to a year ago. In December, the index posted a yearly increase of 6.5%.

“While this is the smallest year-over-year price increase since October 2021, today’s report suggests that the downward trend in inflation may be bumpier than had hoped. It means that the Federal Reserve will push forward with rate hikes through the spring, which will increase borrowing costs for consumers and businesses,” Lisa Sturtevant, Bright MLS’ chief economist, said in a statement. “The January inflation report comes on the heels of adjustments to fourth quarter CPI numbers, which indicated that the pace of disinflation at the end of last year was slightly slower than we had thought. It also follows an exceptional strong January jobs report and rising consumer confidence, which propped up consumer demand.”

The annual increase can be attributed to large yearly jumps in the indexes for shelter (7.9%), food (10.1%), energy (8.7%), household furnishings and operations (5.9%), medical care (3.1%), recreation (4.8%), and new vehicles (5.8%).

The all items less food and energy index rose 5.6% in January, its smallest yearly gain since December 2021. The large yearly increase in the cost of shelter accounted for nearly 60% of the index’s increase.

The CPI rose 0.5% month over month on a seasonally adjusted basis in January after falling 0.1% in December. Energy was by far the largest contributor to the month-over-month increase in the all items index, rising 2.0% from the month prior, thanks to a 6.7% monthly jump in the cost of natural gas and a 2.4% increase in the cost of gasoline.

The index for food also posted a notable gain, rising 0.5% from the month prior.

“The personal consumption expenditures (PCE) index, a key measure of core inflation, will be released later this month. This price index excludes volatile food and energy prices,” Sturtevant said. “The Federal Reserve and other policymakers have become more focused on ‘supercore’ inflation, an even narrower set of prices that also excludes housing.”

Month over month, the all items less food and energy index rose 0.4%, with a 0.7% monthly increase in the shelter index accounting for nearly half of the monthly increase. Compared to December, the rent index and owners’ equivalent rent index each rose 0.7%.

Other categories that contributed to the monthly increase included motor vehicle insurance (1.4%), recreation (0.5%), apparel (0.8%) and household furnishings and operations index (0.3%). Meanwhile, the indexes that dropped on a monthly basis included used cars and trucks (-1.9%), medical care (-0.4%), and airline fares (-2.1%).

According to Sturtevant, none of this is good news for prospective homebuyers looking to purchase a home in the near future.

Home prices have risen much faster than incomes over the past three years. The Fed’s rate increases, which have led to higher mortgage rates, have made the cost of buying a home even more costly. Slowing demand in the housing market was part and parcel of the Fed’s strategy designed to cool consumer demand to bring down inflation,” she said. “In many markets across the country, the housing market has bottomed out and buyers are back, often facing still-low inventory and stiff competition. Those fortunate enough to own a home who have seen their equity rise to record levels and who have locked in historically low mortgage rates are sitting pretty. However, individuals and families who are hoping to buy their first home will find a difficult — and expensive — process awaiting them in the spring housing market.”



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This article is presented by DoorLoop. Read our editorial guidelines for more information.

Can you win in any market?

No seasoned real estate investor would deny the importance of keeping up with macro and micro market conditions. Ignore either, and you don’t really stand a chance.

With that said, lately, conversations of a downturning market have swallowed up evergreen advice. So, it feels like not enough is being said about tried-and-true strategies, principles, and tools. 

Why does this matter? It’s these very strategies that are invaluable for being successful in any market, whether that be to:

  • Maximize your profits
  • Reduce the energy spent managing your rentals and reduce stress
  • Streamline systems and processes to save time 
  • Anticipate issues or roadblocks by preparing in advance

Getting a read on a changing market is vital to the success of your portfolio, but there’s a lot you can do now that will help you be a more successful investor, whether the market goes this way or that. 

Before we start, let’s talk about what we won’t cover.

Besides obvious tips (I know, you’ve read a billion articles with those, and you’re tired of it), the things include:

  • Considering your local market
  • Maintaining a property
  • Choosing the right property

If you were looking for general, boring tips like those, then I’m sorry to disappoint, but there are plenty of other articles you can read on BiggerPockets that cover that.

Instead, below, we’ll be talking about more creative (but still evergreen) tips that aren’t so obvious. Some may ride that line, but the reason I include them is because I feel there’s something that’s often missed about the topic. 

While you’re bound to have heard some of the tips I’m going to cover before if you’re a seasoned investor, my goal is to give you something new and actionable you can take with you to actually improve your business no matter how long you’ve been investing. 

Ready? Let’s talk about it. 

1. Expand Your Networking Opportunities Beyond Just Agents And Investors

As a real estate investor, the value of connecting with other investors who may be able to fund your deals or be a partner on a project is clear.

Connecting with local agents who can find you deals you’re willing to invest in is also straightforward and something you’ve likely already done as well.

And you’ve probably already tried or actively participated in local networking events and groups.

But one area I’ve seen investors at times not take full advantage of is connecting with other local professionals, such as:

  • Title companies/officers
  • Contractors
  • Loan officers

Depending on the types of deals you do, there are many other people that play a vital role in the process of buying and selling real estate that you can benefit from.

Don’t be shy about it, either. These are mutually beneficial relationships that can and will bring you deals and them business.

2. Factor Vacancy Rates Into Your Overhead

Handling vacancies is just a part of managing rental properties. If you’ve been at the game for a while, you know that. How landlords handle vacancies, however, can vary greatly.

The most important thing you can do is make sure you have funds put aside for vacancies, which allows you to have a way to immediately turn around and:

  • Market the property
  • Get an inspection done
  • Get the unit cleaned

All without having to worry about it affecting your bottom line for that month.

The most common numbers thrown around are 5-15% of your gross monthly rent, with 10% for vacancies being conventional wisdom. However, you’ll need to figure out what number works best for you depending on factors such as your market and the type of properties you’re renting. 

Some landlords don’t like putting anything aside at all, in some cases using a line of credit (LOC) to handle surprise expenses. However, this is risky and needs to be handled properly to not incur additional debt.  

3. Find A Great Property Management Company That Matches Your Style

If you’re newer to real estate investing, contracting a property management company could save hundreds of hours per month and your sanity.

If you’re a seasoned investor, however, you may have had a bad experience with a property management company, dropped them, and never given it another try.

The problem with hiring a property manager is that they’re like any other partner in your business: you need to mesh well. If you don’t, it doesn’t work. 

Not every property management business operates the same way. Some companies will have a process that works for you, while you may clash with others. 

Also, every property management firm is run by people. Some of those people you’ll click with, others you won’t. 

You should read up on how to find a property manager that works for you and take some time to learn what you should be looking for before trying a few out.

4. Screen Tenants Fully And Don’t Be Afraid To Turn Someone Down

Sometimes, you have to take what you can get. I get that. However, in many markets, you can and probably should be a bit pickier than you typically are in how you select tenants. 

A better tenant will save you an immense amount of time and money over the course of a lease. They’ll lead to fewer calls, issues, and more time.

It may be worth waiting a bit longer than you typically would to see if you can find someone that is a better fit. 

Make sure to run full background checks, too, not just criminal background and credit reports. Use a service like TransUnion’s SmartMove® that offers access to unique reports such as:

  • Eviction history
  • Income insights
  • ResidentScore system

Doing so will give you a fuller picture of whether that applicant is a good fit, leading to fewer tenant issues over the long run. 

5. Expand Your Toolbelt To Include Creative Financing Tools

If you’ve dipped your toes into creative financing already, you’ll know there are a variety of ways you can find and make profitable deals that are outside of the typical process. 

When the market changes, what worked before may not work any longer (or for a period of time). Some types of deals are mainstays in every market, but how hot they are is another story. Still, others you may want to stay away from altogether, depending on market conditions. 

Short-term rentals aren’t always hot, for example. Neither are fix-and-flips, depending on what kind of deals you typically do and your market.  

To help combat that and allow you to find more deals that make sense based on what you’re looking for (and find ways to grab properties you otherwise wouldn’t be able to), you can sometimes use creative financing.

This includes a variety of strategies, such as:

  • Seller financing
  • Subject to
  • Certain hybrid approaches 

Creative financing is a whole different beast, so there isn’t enough space here to dive into the details. However, you can start with this article.

6. Systematize As Much Of Your Process As Possible

You need to work to streamline and systematize your process in every way possible. That includes how you:

  • Choose which properties to invest in
  • Renovate your properties
  • Manage your properties
  • Collect rent
  • And more

Time saved is money saved and the more you widen your margins the more likely you are to be able to make a particular deal and property profitable.

The other benefit to systematizing? You can teach a team.

If you have a few dozen doors and you still don’t have more than a VA on your team, you’re probably keeping things too close to the chest. 

Systematizing saves you time and money, and can even make it easier to expand your reach into further markets. 

7. Invest In Property Management Software

I know, if you’ve been doing this for a while, then any change to your process can feel like nails to a chalkboard. I’m sure that’s how Blockbuster felt when they turned down buying Netflix for just $50 million too. 

What’s my point? Change is almost always uncomfortable, but adapting is necessary for survival. And what has been one of the biggest upgrades to the portfolio and property management process in the past two decades? Property management software.

Gone are the days of spreadsheets and notepads, and in their place have arrived streamlined, centralized, and simplified systems that make:

  • Everything easier to locate and track
  • A variety of tasks take less time than they used to
  • Make more possible with less effort

Not every property management tool is created equal, but most tools will help you in a variety of useful ways and areas, such as:

  • Rent collection and late fees
  • Listing, screening, and leasing
  • Maintenance and tenant communication
  • And more

Conclusion

The number of great tools, resources, and wisdom out there is limitless. You truly can make it in any market if you know how to play it. 

Some factors are outside of our control, but by building out your toolbox, you’ll have more opportunities to build a successful portfolio in a way that works for you. 

One of the best tools we’ve found at DoorLoop after speaking with thousands of landlords is simply knowledge and information, whether that’s knowing about landlord-tenant laws, how to properly evict a tenant, or access to documents such as forms, checklists, and applications. 

That’s why we put together an all-resources zip file with all of our best checklists, templates, and other resources. It includes: 

  • A collection of checklists such as an apartment maintenance checklist, deep cleaning checklist, sales and negotiations, and an HOA audit checklist
  • Lease agreements and rental forms for every state
  • Landlord reference letter, introduction letter, termination letter
  • Chart of accounts template
  • A residential property questionnaire to find out how happy your tenants are and where you can improve
  • Security deposit return letter
  • And way more

Being a successful real estate investor in any market is a tall claim, I know. But you’ve never had more access to better information than now. Make the most of everything, and don’t be afraid to reach out to your fellow investors for advice and guidance.

This article is presented by DoorLoop

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DoorLoop is the highest-rated property management software online

DoorLoop is the easiest-to-use, highest-rated property management software used to manage hundreds of thousands of units in more than 100 countries around the world. Attract tenant applications, manage leases & work orders, collect rent on autopilot, run accounting & reports, communicate with tenants, and much more from anywhere with ease. 

Learn More About DoorLoop

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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The housing market experienced more volatility last week, with housing inventory dropping as mortgage rates moved higher.

Here is a quick rundown from last week:

  • Purchase application data had a 3% week-to-week increase. The start of 2023 has been good, considering mortgage rates have stayed above 6% most of the time.
  • Weekly housing inventory continues to decline, as we saw a decrease of 13,238 units, double the amount we had this time last year. However, we are working from a higher level in 2023.
  • The 10-year yield jumped aggressively, continuing the decisive move from jobs Friday, and mortgage rates have moved from the recent lows of 5.99% back to 6.50%.

Purchase application data

We saw a weekly increase of 3% in purchase applications and the year-over-year data is improving, although it is still down 37% from last year. The extremely high comps that we had to deal with from October 2022 to January 2023 are coming to an end, which means that every month we should see the year-over-year declines move lower, even if the data just stay flat. 

Last year, we had a historical dive in purchase application data, but recently we found a bottom and purchase apps have bounced from the lows. Since Nov. 9, when this data line started to get better, and excluding the traditional extreme slowdown the last and first week of the year, it’s been positive outside of one week. I am keeping an eye on how much growth we can get with mortgage rates over 6%.

This week, we will get a good test with the purchase application data as mortgage rates have risen recently. I am looking forward to seeing how the data reacts to higher rates. Unlike the COVID-19 recovery, which was fast and sharp, we are now dealing with a much different backdrop. Morgage rates are higher and we’re working from much higher home prices as well. 

The one benefit of the housing market now is that days on the market are no longer teenagers, which means we are getting closer to a more balanced marketplace. This means buyers have more say now in the home-buying process. Finally, all the positive data we have seen since Nov. 9 looks forward 30-90 days, so the existing home sales will show better data coming up.

Weekly housing inventory

When I saw a slight increase in housing inventory in January, I got very excited because some of the demand collapse we saw in the second half of 2022 was from people choosing not to list their homes because of their fear of buying another. So, when I saw the slight inventory increase, I thought this was a good trend.

Before 2020, weekly housing inventory bottomed out in the January/February timeframe, and then the seasonal spring increase would start. From 2014 to 2016, housing inventory bottomed out in January. From 2017 to 2019, the inventory levels in January and February were very close to each other before the seasonal push higher. 

However, since 2020, this hasn’t been the case — inventory has tended to bottom out a little later in the year. In 2021, inventory bottomed out in April, and in 2022 inventory bottomed out in March.

In the last two weeks, housing inventory has been declining significantly and I hope we are coming closer to the bottom of the seasonal inventory decline. Unfortunately, last week we saw a bigger decline in inventory than the previous week, as units fell by 13,238 according to Altos Research.

So I am crossing my fingers that we are getting closer to the end of the seasonal inventory decline because the last thing we want to see is bidding wars again, especially with demand working from much lower levels than what we saw in 2020/2021, and the early months of 2022. The positive aspect is that inventory is still higher than last year

  • Weekly inventory change (Feb. 3-Feb. 10): Fell From 456,990 to 443,416
  • Same week last year (Feb. 4-Feb. 11): Fell from 255,662 to 249,161

Because I could see that housing demographics were going to be good in the years 2020-2024, I really didn’t want to see inventory break to all-time lows during this period. This reality created my fear of home prices overheating, which they did, and once mortgage rates rose, the housing market took an extreme affordability hit. Last year, we had a historical dive in housing demand and didn’t get much inventory. 

Unfortunately, we have a good shot of the next existing home sales report showing even lower inventory levels than the 970,000 level we are dealing with today. This means 2022 and 2023 are the only times in recent history where the NAR active listing data is under 1 million.

10-year yield and mortgage rates

In my 2023 forecast, if the economy stayed firm my 10-year yield range was between 3.21% and 4.25%, equating to mortgage rates staying in a range of 5.75% to 7.25%. For some time now, I have discussed how it would be hard to break under 3.42% with follow-through bond buying, meaning mortgage rates would fall further. The market made a few attempts to break that level, but now bond yields have reversed higher.

The question this week with the CPI report data being released, is whether we will see a W forming in this chart, which would mean bond yields head back to 4.25%, or whether the downtrend continues. Over time, the growth rate of inflation will cool down once rents get accounted for in a more real-time fashion.

Also, part of the 2023 forecast is that if the labor market breaks, the 10-year yield could get to 2.72%, which would mean mortgage rates in the low 5% range. And if the spreads get better, we could even have a 4-handle on mortgage rates. For now, though, the labor market is still solid.

The week ahead

This will be an exciting week for economic data, bonds and housing. First and most important, this week’s purchase application data is vital. It will be the first apps data amid a half a percentage move higher in mortgage rates, and the next few weeks will be critical, too, if rates stay at 6.50% or head higher. Remember, you should prioritize numbers over people; if the tracker data goes negative, you go with data rather than a personal belief.

The big move for rates should be the Consumer Price Index report this week. If it’s hotter than expected, we could see bonds act negatively to that report. Also, this week we have jobless claims, retail sales, Producer Price Index inflation, the homebuilders’ confidence survey, housing starts and the Leading Economic Index!

It’s going to be a busy week with economic data that can move the bond market and mortgage rates. One thing is certain from the data: mortgage rates heading lower, even to just 5.99%, shifted the housing market, which is something to remember as we go forward



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