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Market Snapshot 9.7.22- Bonds Are Seeing A Slight Bounce

Good Wednesday Afternoon, this is the best day of the week,

Mortgage bonds are seeing a slight bounce clawing back about half of yesterday’s losses.

The ten-year treasury is improving as well with the yield at 3.27%. To call a bottom (in price and peak in rates), we need to see a few closes above the current level. While I expect a correction of 20-30% from the most recent run down in price, I am not sure this is the beginning of such a move. We may need to see the ten-year test 3.48% once more, and if it does, no jumping out of your first floor window. The next batch of news that can help us is early next week when we see the CPI numbers. Until then, expect sideways movement.

Harvard (yes the Harvard) collaborated on a report regarding housing.

It is 48 pages, and I am happy to share it if you like, but am including one snippet and three pretty pictures which are self-explanatory, to offer the insight on housing. Once rates subside, we will be back on an upward trajectory.

The Outlook

Assuming that the Federal Reserve can tame runaway inflation without causing a serious downturn, the near term outlook for housing demand is largely positive. Demographic shifts are favorable, unemployment is low, and wage growth remains strong. Conditions on the supply side are also encouraging, with supply-chain delays diminishing and a record number of homes set for completion in the coming months. Nevertheless, it will take time for additional supply to catch up with demand and produce any meaningful improvement in affordability.

In the meantime, production of modestly priced homes remains a challenge.

Innovations in construction techniques hold some promise of reducing costs, although it will take efforts from both the public and private sectors to bring them to scale. Reforms of local land use regulations to allow higher-density development are also essential. But even these major steps are not enough to build homes that lowest-income households can afford. The pandemic clearly demonstrated the fundamental importance of stable housing for basic well-being. The lessons learned over the past two years have led to several proposals to greatly expand the housing safety net and increase support for first-generation homebuyers. It is now crucial to continue the debate over the best approaches to making housing affordable for all.

Please remain safe and healthy, make today great!